Australian building approvals bounced strongly in December with the ABS reporting an increase of 9.2% in seasonally adjusted terms.
The increase, following a 12.4% decline in November, near doubled expectations for rise of 5.0%. A 37.4% surge in Victorian approvals was largely behind the surprisingly strong December performance.
Despite the sharp monthly increase, from a year earlier approvals fell by 2.5% to 18,868.
Encouragingly, approvals for houses and dwellings ex-houses, largely high density units, both registered gains for month.
Housing approvals rose strongly following three months of declines, recording an increase of 5.7% to 9,968. The gain in percentage terms was the largest recorded since April 2015.
From 12 months earlier housing approvals rose by 3.3%.
Approvals excluding houses, now entirely responsible for the month-to-month volatility in the headline figure, jumped by 13.5% to 8,899 following a 23.1% decline in November, leaving the year-on-year decline at 8.3%.
Over the year a total of 232,0778 approvals were granted, the largest calendar year growth on record. Housing approvals numbered 116,323, slightly shading non-housing approvals at 115,752.
The chart below, using data from the ABS, reveals the recent trend in both survey components.
According to the ABS, the total dollar value of approvals rose by 1.1% following a 3.8% decline in November. The value of residential buildings approved rose by 4.7%, offsetting a 6.1% decline in the value of non-residential approvals.
While approvals, like construction starts, are now running at the highest pace on record, many expect that Australia’s construction boom will begin to moderate in the second half of 2016.
Writing earlier this year, Michael Workman, senior economist at the CBA, suggested that residential construction was likely to hit its cyclical peak in the first half of 2016 before moving lower, leaving the annual total at around 211,000 by years end.
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