Dwelling approvals dropped 12.5 per cent nationwide in May, according to data released by the Housing Industry Association (HIA) yesterday.
Ben Phillips, senior economist for HIA, said the slide in approvals was driven by a record fall in unit approvals.
Unit approvals dropped 39.5 percent to a low of 1,934, while detached houses slid 2 per cent.
“Up until [yesterday] morning we were expecting to see residential activity on the rise, so this has come as a bit of a shock,” Mr Phillips told Mortgage Business.
“Dwelling approvals, however, do tend to bounce around a lot so it will remain to be seen whether or not this is a statistical aberration.
“While this may not appear to be a positive outcome for market activity, we do expect residential activity to pick up again towards the end of this year and into early next year.”
On a state by state basis, the number of residential dwelling approvals, seasonally adjusted, decreased by 25.6 per cent in NSW, 8.9 per cent in Victoria, 13.3 per cent in Queensland and 17.5 per cent in South Australia.
Tasmania experienced an upswing in the number of dwelling approvals, recording a 27 per cent increase. Western Australia remained flat while both the Northern Territory and Australian Capital Territory recorded increases of 3.0 per cent and 11.2 per cent respectively.