The ABS just released the latest edition of Australia’s building approvals data and it suggests there is no evidence of any cooling in the recent strength in approvals.
For the month of May total dwelling approvals rose 2.4%, seasonally adjusted, with the strength again concentrated in the unit building sector where approvals increased by 16.6% on the month and are up a stunning 46% over the past year. Private sector housing, on the other hand, fell 8.4% during May to sit down 2.3% in the 12 months to May.
Clearly there is a massive shift happening in the Australian housing market with units consolidating their position as the dominant driver of building approvals.
Whether it’s fuelled by speculators trying to make a buck on the housing boom or just it a reflection of the increased density needed in cities like Sydney, one thing is clear. This massive building boom has taken monthly building approvals to their highest level in decades.
It means there will be plenty of supply coming onto the market in the future and it almost guarantees there will be pockets of weakness.
But for now building homes, even if they are units, remains a cornerstone of the RBA’s strategy for Australia’s economic transition.