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- Australian building approvals jumped by the most since September 2013
- Result largely reflects a steep recovery in non-housing approvals
- Residential building approvals appear to be steadying at elevated levels
Australian building approvals soared in January, recovering after an ugly plunge in December.
According to the Australian Bureau of Statistics (ABS), total approvals jumped by 17.1% to 19,851 in seasonally adjusted terms, more than three times higher than the 5% increase expected by economists.
Compared to a year earlier, total approvals increased by an impressive 12%.
While a stellar headline result — registering the largest one-month percentage increase since September 2013 — it largely reflected a recovery in approvals following a 20.6% plunge in December that was the largest since mid-2012.
Like December, the January result largely reflected movements in non-housing approvals, especially for units.
Private sector approvals in this category jumped by 42.2% to 9,748 after seasonal adjustments, leaving the increase on January last year at 18.1%.
In December, non-housing approvals in the private sector fell by 39.7%.
The ABS said that in original terms, approvals in apartment complexes four or more storeys high jumped by 27.4% to 6,024 dwellings.
“Given the propensity for large revisions, it isn’t worth focusing too hard on gleaning information from monthly swings,” says Henry St John, Economist at JP Morgan.
“Looking at a longer horizon, nearly 105,000 apartment dwelling units have been approved over the last 12 months, which is 8% lower than what was approved over the previous 12 months, from February 2016 to January 2017.
“This is broadly consistent with our view for very gradual moderation in residential investment over the medium term.”
In contrast to the wild swings in non-housing approvals over the past two months, private sector housing approvals fell by 1.1% in January to 9,825 in seasonally adjusted terms, leaving the increase on a year earlier at 6.0%.
In trends terms — helping to eliminate the impact of lumpy multi-apartment approvals — the ABS said private sector approvals for houses fell 0.1% to 9,859, leaving them up 5% over the year.
For non-housing dwellings, approvals rose by 0.4% to 8,816 over the month, an increase of 9.3% on a year earlier.
Given the recent volatility in the ABS’ seasonally adjusted data, the trend readings provide a better overall indication as to what is happening on the ground.
Given what was reported in January, the news on that front was promising, with approvals for both houses and non-houses holding steady at elevated levels.
Mirroring the increase in headline approvals seen in January, the ABS said the total value of approvals rose by 2.7% over the month in seasonally adjusted terms.
The value of residential approvals surged by 18.3%, largely offsetting a 20.7% decline in the value of non-residential building.
