Approvals for new homes have marked the largest decline in seven months, after a sharp slide in go-aheads for apartment blocks.
Approvals for the construction of new homes fell 4.4 per cent in April, much worse than market expectations, but were up 16.6 per cent for the 12 months to April.
Approvals for private sector houses rose 4.7 per cent in the month, while ‘other dwellings’, including apartment blocks and townhouses, dropped 15 per cent, the Australian Bureau of Statistics said.
That fall highlights the volatility of the apartment building sector, Commsec economist Savanth Sebastian said.
He expects one or two months of weakness before the sector bounces back.
“I don’t think there’s anything significant in the result, the Reserve Bank will be comfortable there’s plenty of building work being done,” Mr Sebastian said.
Tighter lending restrictions may also have been a small drag on building approvals, he added.
“Banks are certainly being more responsible in terms of their lending policies, and I think that’s showing up in the house price data as well,” Mr Sebastian said.
Capital city home prices dipped in May for the first time in six months, with drops recorded everywhere except Darwin and Canberra, the latest CoreLogic RP Data home value index shows.
JP Morgan economist Tom Kennedy said a fall in approvals for high rise apartment buildings was to be expected.
“That has been very hot recently and was tracking at unsustainable levels, so the fact that we saw some payback today shouldn’t be a surprise,” he said.
“Even though today’s number is quite volatile, the underlying trend is quite encouraging.”
The data also showed a five per cent rise in homes approved for a single family, which is a positive given the housing market has been dominated by dwellings being bought by investors in the past year, Mr Kennedy said.
“Typically that sector is a lot more representative of what’s going on in the broader housing market,” he said.
“We do view it as a positive sign.”