Matthew Hassan, analyst at Westpac, points out that Australia’s dwelling approvals were much weaker than expected in Oct, recording an 8.1% pull back from September's 7.2% gain.
“The Consensus had been looking for a milder 1% fall. The fall takes total monthly approvals back near their July cycle low, down 23.6%yr.”
“The detail was particularly disappointing – rather than a high-rise driven result, weakness in the month was more evenly spread across all dwelling types, detached houses down 11%, mid-low rise unit approvals down an estimated 4.7% and high rise approvals down an estimated 14%.”
“The renewed weakness in non high rise segments is despite tentative signs of stabilisation in recent months and firmer reads on construction-related finance approvals. These segments are also expected to be more responsive to recent interest rate cuts and the pick up in house prices.”
“Overall the Oct dwelling approvals report highlights the weak outlook for new dwelling construction. High rise segments look susceptible to further declines and non high rise is still softening despite rate cuts and the improved tone to markets since mid year.”
“Falling dwelling investment is set to be a continued drag through 2020 – we expect new dwelling investment to be down 11.5% for the full calendar year 2019 and is forecast to fall a further 8% in 2020. The weakness stands in stark contrast to the rebound coming through in prices but reflects the long lags on high rise projects and the specific issues facing this particular segment that are likely to preclude a rebound in high rise activity.”
“Price gains are also expected to moderate as we head into 2020 as supply starts to lift and as affordability strains re-emerge.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.