Lion IQ

Houses up, apartments down

Australia's approvals data just took an interesting turn.

The Australian Bureau of Statistics (ABS) reported that total dwelling approvals dipped 1.1% between April and May to 17,019. But the headline figure hides a clear divide. Private sector house approvals climbed 2.8% to 10,537, while approvals for dwellings excluding houses, mainly apartments and townhouses, fell 10.4% month-on-month to 6,034.

It's a reminder that the housing pipeline rarely moves in one direction across the board.

The state breakdown was mixed too. South Australia (10.9%), Tasmania (4.8%) and New South Wales (2.2%) all recorded gains for total dwelling approvals, while Queensland (-8.8%), Victoria (-3.0%) and Western Australia (-1.3%) pulled back.

With higher-density approvals now easing, the question is whether this is a temporary wobble or the start of a slower trend for apartment supply.

New home sales pause, but demand hasn't gone anywhere

New home sales dropped 16.7% in May from April, according to the Housing Industry Association (HIA). But before reading too much into that, it's worth understanding why.

HIA chief economist Tim Reardon points to uncertainty – not weakness – as the driver.

"Purchasing a home is the largest financial decision most households will make. When households are uncertain about the economic outlook, their employment prospects or future housing policy settings, they often delay that decision until there is greater clarity," he said.

Three rate rises, rising geopolitical tensions and budget-related tax proposals have all contributed to that hesitation. Importantly, Mr Reardon says it's not the budget measures themselves that are weighing on sales – it's not knowing how they'll land.

The three-month picture is more reassuring, with sales over the period to May still running 18.9% above the same three months a year earlier. And the structural case for new housing remains intact – population growth above 400,000 last year, low unemployment and an ongoing shortfall in supply.