New housing approvals dropped by more than 8% over June, despite an increase for approvals of detached houses over the month.
Figures from the Australian Bureau of Statistics show that new dwelling approvals dropped by 8.2% in June, with a 19.2% decrease in multi-unit approvals to thank for the overall drop.
Approvals for detached houses rose by 4% over the month.
The end of June also revealed a quarter-on-quarter decrease, with approvals down by 4.8% in the June quarter compared to the May quarter.
Housing Industry Association (HIA) economist Diwa Hopkins said the figures likely illustrate that the construction of multi-unit dwellings has peaked.
“It certainly looks like this segment of approvals has peaked, with each of the last three months of activity falling well short of the record-high level reached in March this year,” Hopkins said.
“In contrast, detached house approvals have been tracking fairly steadily at relatively strong levels for the past 18 months. Approvals in this segment of the market have maintained an average of 9,650 per month since January 2014.”
Hopkins said Australia hasn’t seen such a sustained level of approvals for detached houses in more than a decade.
The HIA believes a down cycle for the construction industry is approaching, with it likely to hit the multi-unit sector harder than detached houses.
“While new home building has likely already peaked, we expect it will remain at a very high level in the 2015/16 financial year,” Hopkins said.
“In particular, we are forecasting the approaching down cycle to new home building to be considerably smaller for detached houses than for non-detached houses.”
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