Matthew Hassan, Research Analyst at Westpac, notes that Australia’s dwelling approvals came in slightly below expectations in April with a 5% fall vs consensus forecasts of a 3% decline, while the annual growth slowed to 5.2%yr.

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Private detached house approvals were flat in the month but supported by an abnormally large 20% jump in WA which was coming off very weak reads in February-March. We suspect this relates more to processing issues than conditions on the ground which are still not conducive to a pick-up in the west (Perth house prices still declining and rental vacancy rates above 5%). Ex WA, private detached house approvals were much softer, down 6.7%.”

“Private units were the main driver of the headline decline, posting a sharp 11.5% drop in the April month. Our estimates indicate high rise unit approvals were down over 20%. While extreme volatility makes this sub-segment hard to read, the monthly series looks to be shaping into a second leg lower, as indicated by site purchase data over the past year. That said, it will still take some time to confirm. ‘Medium density’ approvals also declined sharply, by around 6%mth.’

“Overall the April data-flow is broadly in line with our expectations that approvals are tilting towards taking another leg lower through 2018 with the main impact on new dwelling construction coming in 2019.”