Australia's high rise construction boom looks unstoppable for now

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The number of Australian building approvals fell modestly in August, according to data released by the Australian Bureau of Statistics today.

A total of 20,788 dwellings were approved in seasonally adjusted terms, down 1.8% on the levels seen in July.

The decline was far smaller than the 7% drop expected by economists and left total approvals up 10.1% on the levels of a year earlier.

According to the Bureau, private sector housing approvals slipped by 1.3% to 9,305, leaving the change from a year earlier at 6.5%.

Approvals for private sector dwellings excluding houses — namely apartments — fell by a larger 3.6% to 11,073.

Despite the small monthly decline, approvals in this category surged by 26.3% compared to the levels a year earlier.

The enormous year-on-year increase — coming despite increased concern from some analysts of a looming apartment glut impacting prices in some markets — fits with recent strength in new home sales that have been boosted by high density housing sales.

Demonstrating the increased influence of apartments on Australia’s housing market, approvals for units have now outnumbered those for houses in six of the past eight months.

That statistic also fits with the number of dwellings approved over the past 12 months.

In seasonally adjusted terms, there have been 120,917 dwellings excluding houses approved over the past year, easily exceeding those for houses at 117,288.

At 3,629, the difference between the two now stands at the highest level on record.

Fitting with the decline in the headline approvals figure, the value of dwellings approved also fell, led by a steep drop in non-residential building, something that is often volatile on a month-to-month basis.

The ABS reported that the total value of building approved fell by 7.7% in August in seasonally adjusted terms, the first decline in two months.

“The value of residential building rose 0.5% and has risen for two months,” noted the ABS. “The value of non-residential building fell 24.3% and has fallen for two months.”

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