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. However, some economists think the bottom of the cycle may be approaching.
The Australian Bureau of Statistics have now released the latest building approval figures and they indicate total approvals have fallen again. Seasonally-adjusted, total approvals fell by 4.7% in April, which is below the market consensus figure of a flat result but not as bad as March’s revised figure of -13.4%. On an annual basis, total approvals fell by 24.2%, as compared to March’s comparable figure of -25.4% after revisions.
David Plank, ANZ’s Head of Australian Economics, thinks the approvals trough may be close. “Given the modest turn in the credit cycle, indicated by the ANZ-Property Council of Australia survey and recent events, we think we are getting close to the bottom of the downturn in residential approvals. The strong rise in non-residential approvals is encouraging.”