The oft-discussed apartment oversupply appears to be coming to a head. Two important pieces of forward-looking ABS data have been released this week and the results are not encouraging. Yesterday’s building approvals saw a massive 24.8% fall in approvals for units month-on-month – though the seasonally adjusted figures can be very noisy. The smoother ‘Trend’ data, showed a 6.4% drop month-on-month, and 11% year-on-year. The ‘Trend’ data has been heading south for nearly six months now.
Also of concern was today’s quarterly CapEx data. While equipment, plant, and machinery was positive, a huge fall in buildings and structures dragged the entire data series down to a large loss. Importantly, the ‘Trend’ data here big losses for both quarter-on-quarter, and year-on-year.
Since the end of the mining investment boom, housing has been propping up private investment. However, as construction appears to have eased off recently, it appears the edge of that ‘CapEx cliff’ is now far above us.
Building approvals are painting a similar picture, with the declines not restricted to just units – detached houses are also going down.
It’s worth noting, that both these data series are based on volumes and tell us nothing about property prices.
The RBA tracks four property price indexes, all of which show slowing growth in house prices, but no outright falls.
Source: RBA Chart Pack
View the building approvals data here: (VIEW LINK)
View the CapEx data here: (VIEW LINK)