Approvals for the construction of new homes jumped by a surprise 11.7 per cent in November, driven by a spike in apartment and townhouse building in Melbourne.
The increase in high density building in the Victorian capital meant overall approvals comfortably beat market expectations of a 1.0 per cent decline.
The notoriously volatile ‘other dwellings’ category including apartments and townhouses leapt 30.6 per cent in November – up from a 1.0 per cent decline in October – which JP Morgan analyst Tom Kennedy said was likely due to the approval of a very large single project.
Mr Kennedy said the spike was unlikely to be sustained.
‘We are inclined to view the November approvals surge as likely to come with a sharp correction in coming months,’ Mr Kennedy said.
‘Some mortgage rates have started to creep higher and macro prudential policy will remain a binding constraint on mortgage growth for some time yet.’
ANZ senior economist Daniel Gradwell said Victoria’s apartment approvals were at a record high, but agreed that the surge will unwind over coming months.
While the number of high-density approvals was just short of the all-time high of two years ago, single family dwelling approvals – which JP Morgan regards as a more accurate reflection of trends – came in weaker than expected, down 3.0 per cent on October.
Approvals for private sector houses fell two per cent in November in only the second fall since last May, according to data released on Tuesday by the Australian Bureau of Statistics.
Total approvals jumped 37.9 per cent on a seasonally adjusted basis in Victoria, 10.4 per cent in Tasmania, and 4.0 per cent in WA.
Approvals in Sydney and Brisbane fell by 2.3 per cent and 2.4 per cent, respectively.
Total building approvals were up 17.1 per cent over the 12 months to November.
The Australian dollar moved higher rose from 78.43 US cents just before the data’s release at 1130 AEDT, to 78.53 US cents a few minutes later.
The local currency was trading at 78.56 US cents at 1355 AEDT.