Australia: Unconvincing uptick in dwelling approvals - Westpac

Matthew Hassan, analyst at Westpac, notes that Australia’s dwelling approvals rose 0.7% in May, slightly better than expected while consensus was looking for a flat month.

Key Quotes

“Revisions also softened last month's decline, April's fall pared back from –4.7% to –3.4%.”

“Despite the positives, the detail cautions against reading too much into the uptick with the main upside surprise in the volatile high rise segment – a segment that still looks to have downside risks going forward – and other segments weak.”

“Detached house approvals were down –0.3% with the previous month's fall revised from –2.6% to a milder –1.3% dip.”

“Private units approvals posted a 1.2% gain. Our estimates suggest all of this was driven by 'high rise' which looks to be up about 10% with 'low rise' likely down month to month in seasonally adjusted terms.”

“Total approvals ex high rise (covering both detached houses and mid-low rise) look to be down about –0.8% for the month and are still trending lower at a double digit annual growth rate.”

“Overall the May update was a touch firmer than expected but the detail was not great with clear questions around the sustainability of the gain in high rise approvals and weakness elsewhere.”