According to a recent Australia Bureau of Statistics (ABS) report, the total number of dwellings approved fell 27.6% in January (seasonally adjusted) after a 15.3% increase in December 2022.
Commenting on the report, ABS head of construction statistics, Daniel Rossi said: “Approvals for private sector houses fell by 13.8%, the fifth consecutive drop, to be the lowest result recorded since June 2012.”
Approvals for private sector houses fell in all states: Western Australia (-18.7%), New South Wales (-17.3%), Queensland (-16.6%), Victoria (-9.9%) and South Australia (-2.8%).
The value of total building approvals fell 18.6%, following a 1.0% increase in December, while the value of total residential building approvals fell 13.6%.
ABS noted that approvals are about as low as they’re going to get at the moment but if they don’t shoot too high (off-trend) perhaps interest-rate rises may be eased?
First Home Buyer Loans
The report also noted that the number of new owner-occupier first-home-buyer loan commitments fell 8.1% in January 2023, stating: “Owner-occupier first-home-buyer lending continued to decline from the high reached in January 2021, which coincided with the winding down of COVID stimulus measures.
“Anecdotal feedback from lenders suggested that reduced borrowing capacity due to rising interest rates further dampened overall demand for new housing loans in recent months.”
The value of total new owner-occupier loan commitments fell 4.9% to $14.7 billion, while new investor loan commitments fell 6.0% to $7.4 billion.
So, reduced loan demand may signal reduced interest-rate pressure, but . . .
Consumer Price Index
The ABS report also noted that the monthly Consumer Price Index (CPI) indicator rose 7.4% in the year to January 2023, stating: “This month’s annual increase is lower than the 8.4% rise for the year to December 2022 – the second highest annual increase since the start of the monthly CPI indicator series in 2018, signifying ongoing high inflation.”
Hours Worked
Compounding this dilemma, unemployment fell to 3.5% in February, while seasonally adjusted monthly hours worked increased by 3.9%.
Following the 2.1% fall in January, the hours worked in February bounced back strongly to a level similar to late 2022 and were 5.1% higher than February 2022.
So, while ‘big-ticket’ spending seems to have slowed under interest-rate pressures, smaller scale weekly/monthly trends still seem to be up.