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According to new figures from Westpac Institutional Bank IQ (WIBIQ), dwelling approvals fell by a total of 12.6 per cent in October.
Westpac senior economist Matthew Hassan commented that the decline in high-rise approvals was “considerably more volatile”, dropping by 40 per cent to its lowest level since September 2014.
“Other segments were also soft, most notably detached house approvals down 3.4 per cent – a sizeable fall for what is usually a much more stable component and one that should have seen more support from recent rate cuts,” Mr Hassan highlighted.
“Overall the update is unambiguously weak and puts a clear marker in the ground showing the construction cycle is now turning down,” he said.
In October, NSW reported a fall in dwelling approvals of 15.7 per cent month-on-month. This was closely followed by Western Australia (-14.3 per cent month-on-month) and Queensland (-9.8 per cent month-on-month).
South Australia and Victoria also posted a drop in dwelling approvals of 8.4 per cent and 2.7 per cent month-on-month respectively.
Notably, Western Australia experienced the sharpest year-on-year drop in dwelling approvals of 36.8 per cent.
Mr Hassan noted: “The long lags on high rise projects, which on average take two to two-and-a-half years to complete, mean the downturn in this segment will not impact construction activity until well into 2018 with work done set to be well supported in 2017.”
“Westpac’s current forecasts are based on a wind-down in high rise approvals broadly in line with the one shown today impacting activity in 2018. From our point of view, the main risk for 2017 is the degree to which other segments weaken,” he concluded.
[Related: Apartment approvals fall 17.5%]