Building Approvals disappoint again, but are there signs of hope for QLD?

Posted on May 30, 2019 by Pete Faulkner - Building Approvals, QLD, Uncategorized

The ABS release of April Building Aprovals data has disappointed the markets again coming in below expectations. Seasonally adjusted approvals were down 4.7% m/m for a year-on-year decline of 24.2%. The less volatile (and perfered) Trend measure showed a 0.6% m/m drop and a fall of 21.8% y/y. House approvals were down 17.1% for the year while Units dropped by 27.5% (Trend).

Given the widely held expectations of an ALP election win prevailing at the time of this data we might expect to see some kind of a ‘relief bounce’ in coming months in the sector.

In Queensland the data, while still weak, might hold a glimmer of hope that a bottom might be at hand. Seasonally adjusted approvals increased by 11.3% for the month on the back of a spike in unit approvals (up 39.8% m/m). This kind of volatility in Unit approvals is not unusal and the reason we much prefer the Trend series, particularly at the State level.

That Trend data shows month-on-month data as unchanged with the year-on-year rate of declining slowing to 32.1%. House approvals are down 24.1% y/y while Unit approvals fell by 44.3%. This result of no monthly decline in Trend approvals is the first in 15 months and may signal something of a bottoming out in Queensland, especially if we do see a post-election bounce. Trend unit approvals have risen (albeit very marginally) for the past 3 months while the rate of decline in house approvals has slowed sharply over the past 6 months.

Next week sees the release by the ABS of their original regional approvals data at which time we will update and release our own Conus Regional Building Approvals Trend series.