The release of May Building Approvals from the ABS this morning were better than the market had been expecting. Total approvals (seasonally adjusted) rose by 2.4% in May against expectations of a 1.2% increase. This gives us a 17.6% increase from the same time a year ago. However, the increase is all due to a very sharp uptick in the number of unit approvals (which were up 15.2% on the month) while house approvals actually fell 8.5%. If we consider the Trend series (which will smooth out this kind of volatility) we see total approvals fell by 0.1% but were up 18.5% from a year ago. As the chart below makes clear, we seem to have hit something of a plateau.
Unfortunately for QLD the plateau is a distant memory. Seasonally adjusted data shows a 3.6% increase for the month in total approvals, although this equates to a 5.0% fall from the previous year (largely due to a freakishly high number last May driven by very strong unit approvals…see our commentary last year). As is the case nationally, the strength all comes from volatile unit approvals, which were up 13.7% on the month; house approvals fell 5.3%. Considering the Trend series we see a continuation of the weaker story in QLD. The monthly Trend data fell by 2.1% and, although Trend remains 13.9% above the level last year, the graph makes clear the sharp slowdown we have seen since earlier this year.
Regional approvals data will be released next week.