Approvals figures for dwellings, that is, apartments and houses, have been heading south since mid-2018. As an indicator of investor confidence, falling approval figures represent a worrying signal, not just for the building sector but for the overall economy. There had been some expectation of a recovery in recent months and now that recovery may have arrived.
The Australian Bureau of Statistics has now released the latest figures from September and total residential approvals jumped by 7.6% on a seasonally-adjusted basis, more than the flat result which had been expected and a substantial improvement on August’s revised figure of -0.6%. However, on an annual basis, total approvals fell by 19.0%, although this annual figure is also an improvement on August’s comparable figure of -21.1% after revisions.
ANZ economist Hayden Dimes said, “Housing approvals surged in September following a sharp rise in approvals for units and decent pick up for houses. The rise in approvals for units was primarily in Queensland, ACT and South Australia.”
Local bond yields ignored largish falls of US Treasury yields in overnight trading and yields at the short end moved a little higher, although the latest private credit figures may have had some effect. By the end of the day, 3-year ACGB yields had gained 3bps to 0.81% while the 10-year yield remained unchanged at 1.14% and the 20-year yield had crept up 1bp to 1.54%.