In the view of the analysts at Westpac, unwinding high-rise spike dominate what looks to be a very gradual upswing in Australia’s non-high rise approvals.

Key quotes:

“Dwelling approvals posted a much sharper than expected pullback in Jan as a spike in high rise approvals unwound and bushfire effects dragged at the margin. The consensus had been looking for a 1% gain. Westpac was forecasting a flat result with a high-rise pullback expected to neutralize a gradual uptrend in non-high rise.

Note that monthly volatility is always an issue with approvals, especially in the Jan month. Double-digit monthly swings are reasonably common due to the lumpy nature of 'multi-dwelling' high rise approvals. The larger seasonal adjustments applied in Jan also act to amplify any volatility.

The detail confirms the broad thinking behind our 'flat' call but with a sharper pullback in high rise approvals and a more muted upswing in non-high rise. It also suggests direct effects from bushfires in regional areas of NSW, Vic and SA in Dec-Jan have been minimal.”