Australian building approvals are rolling over, down -2.4% on-the-month in April, following a -19.2% dip in March, the Australian Bureau of Statistics reported on Tuesday.
From a year-on-year perspective, total dwelling approvals have dipped -32.4% in April, cycling through a great pull-forward in stimulus from last year (e.g. Home Builder grant closed for Victoria in mid-April)
Daniel Rossi, ABS Director of Construction Statistics, said: "The fall in the total number of dwellings approved in April was driven by approvals for private sector dwellings excluding houses, which fell 6.1 per cent."
The value of total building approvals fell -12%, but the value of total residential buildings increased 4.7% after an -18.7% fall in March.
Dwelling approvals are reverting closer to historic trend levels after a volatile 2021.
"Still, the above would appear reflective of cyclical challenges now bubbling away, which could be quite problematic if the RBA needs to tighten, due to budding inflationary pressures," said Aequitas Investment Management.
The main ASX-listed building material companies over $1bn market cap include (% year-to-date performance):
Boral (ASX: BLD) -55.4%
Brickworks (ASX: BKW) -0.4%
CSR (ASX: CSR) -17.3%
Adbri (ASX: ABC) -14%
The average stock has declined -20.4%.
In Brickworks' half-year FY22 results, the company said that demand for its building products remains strong, with a large backlog of housing construction work in the pipeline.
However, Brickworks flagged "medium-term uncertainty" due to the post stimulus-induced surge and weak building approvals.
While most of these companies reported solid earnings in the first-half and provided sound commentary for the full-year FY22, the ongoing decline in building approvals could catch up to earnings.
Get the latest news and insights direct to your inbox