Dec building approvals defy forecast dive
Building approvals slipped in December, though not by as much as the market feared.
Total dwelling approvals dipped 0.2 per cent for the month to 14,752 on a seasonally adjusted basis, outperforming expectations of a 5.0 per cent decline from a downwardly revised 10.9 per cent surge in November.
Approvals for private sector houses slipped 0.1 per cent to 8,486 for December, the Australian Bureau of Statistics said on Monday, while the "other dwellings" category that includes apartment blocks and townhouses also dropped 0.1 per cent, to 6,087.
NAB economist Kaixin Owyong said the data was a tentative sign that approvals may have troughed.
"Both house and unit approvals were broadly unchanged in the month and the trend for both is now positive," Ms Owyong said.
"That said, the decline in approvals to date still points to a further sharp fall in residential construction, of around 20 per cent from peak to trough."
Building approvals in the 2019 calendar were 18.5 per cent lower compared to 2018, which Housing Industry Association economist Angela Lillicrap said had weighed heavily on the economy.
"The start of 2019 was tough for the residential building industry with the credit squeeze, falling house prices and uncertainty surrounding the federal election putting a dampener on confidence," Ms Lillicrap said.
"The market did improve in the final months of 2019, suggesting that the building industry will not continue to constrain economic growth in 2020. New home building has stabilised at relatively strong levels."
Ms Lillicrap said while continued growth in house prices will assist in bringing investors back to the market, restrictions on foreign investors mean it will be unlikely to result in the same boom as experienced in the previous cycle.
On an annual basis, building approvals are up 2.7 per cent, though private sector house approvals are still down 7.1 per cent for the 12-month period to December.
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