The ABS released their data on Building Approvals for May 2015. Using our preferred data view, trend, which irons out some of the variables, the estimate for total dwellings approved fell 0.1% in May after rising for 11 months. The trend estimate for private sector houses approved rose 0.1% in May and has risen for six months. The trend estimate for private sector dwellings excluding houses was flat in May after rising for 11 months. The trend estimate of the value of total building approved fell 0.9% in May and has fallen for three months. The value of residential building rose 0.1% and has risen for 11 months. The value of non-residential building fell 3.4% and has fallen for five months.
Overall levels of approvals are still running higher than anytime this century, thanks to the growth in units, which we this are correlated to the high demand for investment property. High density development is more profitable for builders, and we know demand remains strong in the current low interest rate environment from local and international purchasers. The fall in the AU dollar makes foreign investment even more attractive. However, high volume builds, constructed for profit, will tend to degrade quite quickly, and compliance to building regulations will not necessarily be sufficient to ensure quality long term homes.
Comparing the seasonally adjusted estimate for total dwellings approved rose 2.4% in May following a fall of 5.2% in the previous month. The seasonally adjusted estimate for private sector houses fell 8.4% in May after rising for two months. The seasonally adjusted estimate for private sector dwellings excluding houses rose 16.6% in May following a fall of 16.9% in the previous month. The seasonally adjusted estimate of the value of total building approved rose 2.1% in May following a fall of 3.1% in the previous month. The value of residential building rose 3.3% following a fall of 3.7% in the previous month. The value of non-residential building fell 1.1% and has fallen for two months.
These seasonally adjusted series are too volatile to draw any conclusions, in DFA’s view, though others will I am sure prefer to focus here!
