Building approvals have risen slightly lower than expected in August despite a rebound in apartment permits, underlining the gradual easing in the housing construction sector.
Approvals for new homes rose 0.4 per cent during the month, missing market expectations of a 1.2 per cent increase.
Approvals for private sector houses slipped 0.6 per cent in August, data from the Australian Bureau of Statistics showed on Tuesday.
However, permits in the volatile ‘other dwellings’ category, which includes apartment blocks and townhouses, were 4.8 per cent higher in August at 8,496.
Although total dwelling approvals are down 15.5 per cent over the 12 months to August, economists said these are still at a relatively high level compared with past cycles.
“This high level of activity supports our view that the decline in residential construction cycle should be gradual and reasonably shallow,” CBA economist Kristian Clifton said.
“Strong and rising population growth means the demand for new housing remains firm and, despite the record number of new homes built in recent years, there is no sign of oversupply overall.”
Housing construction in Australia has also continued to be supported by record low interest rates, but rising household debt levels have increasingly worried regulators.
The Australian Prudential Regulation Authority tightened investor lending rules in March, forcing major lenders to increase rates and make investor loans more expensive.
As a result, approvals have trended lower across the four largest states of NSW, Victoria, Queensland and WA, but strong population growth has helped absorb new supply.
Tuesday’s figures showed approvals for the three largest capitals of Sydney, Melbourne and Brisbane at negative annual rates, with the monthly decline steepest in Sydney, with dwelling approvals down 9.5 per cent in August.
ANZ economist Daniel Gradwell said recent data has indicated that the downturn in approvals is likely to be capped.
“This result provides further support to our view that the downturn in new approvals has largely run its course,” Mr Gradwell said.
“We continue to expect approvals to remain around these still-elevated levels, while a significant backlog of work will ensure construction activity remains solid for some time yet.”
The data helped push the Australian dollar down to 78.15 US cents at 1410 AEDT, from 78.29 US cents just before it was released.
It then dipped below 78 cents after the Reserve Bank held the central cash rate at 1.5 per cent.