Housing takes a hit as building approvals fall
Nationally, building approvals fell 6.9 per cent, seasonally adjusted, over the month. It's the second consecutive month of decline and construction activity is now down 13 per cent on the same time last year.
Economists had tipped building approvals would rise 2 per cent in June after the Reserve Bank of Australia cut the cash interest rate to a record low of 2.75 per cent in May.
Shane Garrett, senior economist for the Housing Industry Association, said the figures were "very disappointing" in light of signs the housing market had been improving.
"It shows how housing activity in general is really quite vulnerable at the moment.
"We had reason to believe over the last six or nine months there was a bit of recovery under way in building, but these figures would put a question mark over that again," he said.
The HIA has reiterated its call for the RBA to cut the interest rate by a further 25 basis points to underpin the earlier signs of a recovery.
"The succession of interest rate cuts have had an important role in getting housing activity back up off the floor to a certain degree."
In Victoria, building approvals plunged by 24.3 per cent over the month, the country's worst performance by a wide margin.
Falls of 9.6 per cent were seen in South Australia, and 0.4 per cent in Western Australia. New South Wales and Queensland posted rises of 6.7 per cent and 7 per cent.
MacroBusiness economist Leith van Onselen said much of the falls were due to declines in building activity in the apartment market.
Nationally, apartment and unit approvals fell 12.6 per cent in June and were down 37.4 per cent over the year.
Detached homes declined by 1.2 per cent over the month but rose 9.9 per cent for the year.
Victoria alone witnessed a 40 per cent decline in unit and apartment approvals.
In NSW, they rose 19 per cent.
cvedelago@theage.com.au
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Frequently Asked Questions about this Article…
Building approvals fell nationally by 6.9% (seasonally adjusted) in June, marking a second consecutive monthly decline. Construction activity was also down about 13% compared with the same time last year.
No — economists had expected a 2% rise in approvals after the Reserve Bank cut the cash rate to a record low 2.75% in May, but approvals instead fell sharply in June, so the anticipated rally did not materialise.
Victoria recorded the worst monthly performance with a 24.3% plunge. South Australia fell 9.6% and Western Australia 0.4%. New South Wales and Queensland posted increases of 6.7% and 7% respectively.
Apartment and unit approvals dropped 12.6% in June and were down 37.4% year‑on‑year, driven by sharp falls in some states (Victoria saw about a 40% decline in unit/apartment approvals). Detached house approvals declined 1.2% for the month but were up 9.9% over the year.
HIA senior economist Shane Garrett called the figures 'very disappointing', saying housing activity looks vulnerable and casting doubt on a tentative recovery. MacroBusiness economist Leith van Onselen pointed to weakness in the apartment market as a major factor.
The Housing Industry Association has reiterated its call for the RBA to cut the cash rate by a further 25 basis points to help underpin earlier signs of recovery, noting that successive rate cuts have played an important role in lifting housing activity from the lows.
The drop — especially the steep fall in apartment approvals — signals greater short‑term vulnerability in housing activity and potential softness in new supply and developer pipelines. Investors should be aware of uneven state results and sector differences (apartments vs detached homes) when assessing risk and opportunities.
Construction activity was about 13% lower compared with the same time last year. A decline of that magnitude can affect housing supply, developer activity and local construction jobs, and it may influence future pricing and investment returns in affected markets.
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