Dwelling approvals recorded a 17.3% drop in July to be down 10.5% for the year, according to the ABS.
While the monthly fall was spectacular and larger than the median consensus forecast of a 5% decline, Westpac suggested it was not outside the realm of expectations, with several forecasters anticipating a double-digit decline.
For the record, Westpac was forecasting a 10% drop.
“The main reason for the downbeat expectations was the surge in approvals in May (+27.8%) that was largely sustained into June (–1% mth) and led by the extremely volatile units segment which includes high rise developments that can see very lumpy moves due the size of projects,” Westpac suggested.
“Moreover state government policy changes had clearly encouraged many developers to bring forward projects into the first half of the year in order to qualify for purchaser incentives,” Westpac added.
High-rise approvals nearly trebled between March and June, but in July high-rise approvals slumped 70% to be below their March level.
“While that sort of volatility makes underlying trends very difficult to discern there were some positives in the July detail,” Westpac acknowledged.
The Housing Industry Association noted a weaker than expected update on new home building with HIA chief economist Dr Harley Dale saying the 40% drop in approvals for “other dwellings” in July 2012 was “uncomfortably large.”
“There is therefore still no sign of a widespread recovery in new housing, and in its own right today’s approvals update takes us in the wrong direction,” says Dale.
Dale added all three new housing updates available to date for July signal a further deterioration in new housing into 2012-13.