New housing approvals fell during August, driven down by a decrease in the approval of multi-unit dwellings.

Figures released yesterday by the Australian Bureau of Statistics show that compared to July, building approvals fell by 6.9% over the month.

The figures show that multi-unit approvals dropped by 16.9% during August, while detached housing approvals had an upswing with a 4.4% increase.

While there was a monthly drop, the figures do show an increase in approvals over the previous 12 months.

Detached house approvals increased by 3.0% compared with August of last year, while multi-unit approvals have seen growth of 8.6% over the same period.

Housing Industry Association senior economist Shane Garrett said the decline over August didn’t come as a shock.

“Australia’s new home building market saw record levels of activity during 2014/15, with new dwelling commencements totalling about 215,000,” Garrett said.

“We project that new home building will ease back during the 2015/16 year, so the slowdown in building approvals is unsurprising in this context,” he said.

Garrett also said the construction industry is currently facing a number of obstacles that should be addressed by policy makers.

“The residential construction sector as a whole is facing strong headwinds in the form of tight land supply conditions in key markets, planning delays, and the unfavourable effects of recent credit restrictions.

“Residential building is making a vital contribution to growth in the domestic economy at this time, and it is important that we see prompt policy solutions to deal with the problems of land supply and the taxation burden on the sector. This will allow the housing industry to play its full part in driving our economy forward.”

During August 2015, total seasonally adjusted new home building approvals increased in South Australia (+27.9%), Tasmania (17.3%), Western Australia (+6.9%) and Queensland (+4.5%).

Seasonally adjusted approvals declined in New South Wales (-28.5%) and Victoria (-0.7%).

In trend terms, approvals increased by 8.3% in the Australian Capital Territory but declined by 0.7 % in the Northern Territory.