Australian building approvals tumbled in May, recording a drop of 5.2% to 19,276 in seasonally adjusted terms.
The figure, below the 3.3% decline expected, all but reversed solid gains achieved in the prior two months. It was also the largest monthly percentage decrease since November last year.
According to the Australian Bureau of Statistics (ABS), the fall in May was driven entirely by weakness in high density housing approvals which plunged 10.3%.
At 9,460, approvals for this segment — largely apartments — fell by 9.1% from the levels of a year earlier.
Approvals for detached housing were largely unchanged, rising 0.2% after seasonal adjustments. At 9,816, they increased by 1.5% from May 2015.
Over the past year there were approximately 233,974 dwellings approved, up 2.67% from the number recorded in the year to May 2015. However, the rolling annual total is now edging lower having hit a record-high of 240,842 in October last year.
By category, there were 117,324 housing approvals granted over the past year, narrowly edging out approvals excluding houses which came in at 116,650.
As seen in the chart below, the moderation in building approvals has been driven entirely by a slowdown in high density housing.
Mirroring the decline in the number of dwellings approved, the value of approvals also slumped in May, partially reversing an enormous 18.2% gain in April.
“The value of total building approved fell 10.3% in May following a rise of 18.2% in the previous month,” said the ABS.
“The value of residential building fell 6.4% after rising for three months. The value of non-residential building fell 18.5% following a rise of 47.7% in the previous month.”
Although the monthly figures were ugly, it must be remembered that the weakness was almost entirely due to weakness in highly volatile high density approvals.
Although nothing can be read into one month of weakness, as evidenced by the rolling 12 month approvals chart above, it appears that the peak in Australian building approvals has already past, at least until the next housing construction cycle begins.