Home approvals spike driven by “rogue” high-rise number

02 April 2019

Aside from engineering and architectural design, one of the earliest requirements of a building project is to obtain approval from the relevant statutory body. While not all projects which have been approved are completed, all completed projects have been granted approval. Approvals data thus provides a useful indicator of future construction activity.

 The latest building approval figures have been released by the Australian Bureau of Statistics and they indicate the downtrend which started in mid-2018 may have ended. Seasonally-adjusted, total approvals increased by 19.1% in February, which is well over the market consensus figure of -1.8% and a large increase from January’s revised figure of +2.3%. On an annual basis, total approvals fell by 12.5%, as compared to January’s comparable figure of -28.9% after revisions.

Westpac senior economist Matthew Hassan noted a large rise in high-rise approvals among the figures. “The spike is almost certainly a one-off, making the headline result in a misleading ‘rogue’. Indeed, approvals ex high-rise look to have been significantly weaker than expected.”