Dwelling approvals down 10.1% year-ended February, but houses just 2.7% softer

Listen to some pundits and housing cycles are impacted dramatically by events like elections. Others are less certain, preferring to stick to the known annual cycles. Most of us resist the temptation to ‘day trade’ the housing data – preferring to analyse annual trends for what are often the culmination of years long decision making. That is why Australians are really taking notice now dwelling approvals are down 10.1% (year-ended February) and at 203,622 separate approvals, are headed down below 200,000 per annum for the first time since July 2014.

Although total dwelling approvals have softened markedly, we can see in the chart below that there remains a big difference between the total and free-standing dwellings or houses. 

To go straight to the dashboard and take a closer look at the data, click here.

Annualised approvals of Houses (117,094 year-ended February 2019) are shown by the red line, which has barely moved, compared to the more febrile green line, which displays total annualized approvals. Houses accounted for 57.5% of total dwelling approvals over that period, continuing to push their share up, as the market continues down.

But, as the next chart and table show, that does not mean Houses are going unscathed. In February 2019, approvals for new Houses totalled 8,676, down a large 14.3% on February 2018. This could be related to the election and the apparent uncertainty of such triennial events. But it also may simply be directly connected to the general softness in domestic housing markets. A mix of the two seems most likely to our mind.

To go straight to the dashboard and take a closer look at the data, click here.

However, on an annualized basis, the decline in dwelling approvals has been smallest for Houses. Where as Flats 4+ Storey have succumbed 19.7%, at 49,642 which is just about double the contribution of 2+ Storey Semi-Detached dwellings or Townhouses. 

Maligned they may be, but higher rise apartment blocks are important to the domestic housing economy. That this category includes the important group of dwellings approved in blocks between four and eight storeys means they remain important for the forestry and wood products industries. Plus the panel sector is affected as less apartments means less kitchens.

For all that there are national trends and patterns, like elections one or lost in a couple of states, and indeed a couple of seats in those states, the health of the national housing industry is actually quite variable across the country, as the next item shows.