Australia's housing construction boom appears to have peaked, despite a rebound in monthly approvals.
Building approvals rose by a better-than-expected 2.2 per cent in September and a record 21.4 per cent for the year, Australian Bureau of Statistics data showed on Monday.
Economists noted that the monthly rise was only a partial recovery from August's revised 9.5 per cent fall and that housing construction was likely to be less of driver of economic growth going into 2016/17.
Approvals for private detached houses had been flat for the best part of a year while those for medium density blocks were on the decline, NAB economists said.
"With buyer enthusiasm showing signs of tiring, potential new supply is responding by also pulling back, especially with a lot of apartment development work yet to be finished and with more than ample new apartments still on the market for sale," they said in a research note.
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CommSec chief economist Craig James said while Australia's construction boom is probably over, activity will remain at relatively high levels for at least the next six to 12 months.
The current annual total of approvals is 18 per cent higher than the previous peak set 21 years ago, he said.
"Interest rates remain low and we're still playing catch up in terms of strong underlying demand," he said.
Continued growth in high-density residential approvals would add yet more work to the construction activity pipeline, Mr James added.
Approvals for the 'other dwellings' category, which includes apartment blocks and townhouses, rose 6.1 per cent in September, more than offsetting private sector houses, which fell 1.9 per cent.
"The construction phase takes longer (for apartments), which means you'll have a range of housing-related industries that'll be buoyed for quite some time," Mr James said.
So far this year, every monthly gain in building approvals has been followed by a fall the following month, and vice versa.
The wild swings have been driven by the volatile high-rise apartments category, which jumped a remarkable 53.5 per cent for the year to September.
JP Morgan economist Tom Kennedy said activity remained elevated in residential construction.
"But we've probably seen the peak in terms of the boost to GDP (gross domestic product) growth and the boost to approval numbers," he said.
Mr Kennedy expects housing sector activity to ease slightly.
"From here, I would expect the contribution to economic growth to come off a little bit but not turn significantly negative," he said.
"(It would) just, perhaps, be a modest drag in the final quarter of this year and also into 2016."
