The number of building approvals has dived June, as the volatile apartments figure shrank sharply in the month, official data shows.
The Australian Bureau of Statistics data showed the number of buildings approved declined a seasonally adjusted 8.2 per cent to 17,868 in June, the largest monthly fall since September 2014.
The fall is eight times larger than economists were expecting. Forecasts by analysts surveyed by Bloomberg predicted only a 1 per cent decline in approvals during the month.
June's result leaves the number of approvals well below March's high-water mark of 19,419 approvals, which itself was an increase on January's previous record, after apartment approvals rose significantly.
June’s sharp fall was driven by a large decline in the approval of 'other dwellings', which includes apartment blocks and townhouses, a volatile figure, representing the bulk approval rate for apartment towers.
The figure slumped 20.4 per cent, in seasonally adjusted terms, during the month, to 7,887 dwellings.
However, the number of detached homes approved in the month was stronger, bouncing back from a soft result in May.
The number of approved houses rose a seasonally adjusted 4.3 per cent in June to 9,661.
Over the 12 months to April, total building approvals were up 8.6 per cent on a seasonally adjusted basis, the ABS said, far short of economist expectations of a 19.5 per cent increase.
Over the same period apartment approvals have surged 16.3 per cent, while approvals for private sector houses have lifted a modest 3.3 per cent.
In trend terms, which strips out month-to-month volatility in the figures, housing approvals have increased 14.4 per cent over the year to June, after shrinking 1.2 per cent, in trend terms, in the month.
However, the trend rate of dwelling approvals has now fallen for four straight months, at a time when the Reserve Bank of Australia is trying to stimulate the economy with record-low interest rates.
JP Morgan economist Tom Kennedy said the underlying details in the building approvals figures aren't that bad, but he doesn't expect it to significantly strengthen again this year.
"It's unlikely that you'll see any further increase in approvals volumes, you'll probably see them hover around the current levels for a while," he said.
"But there are disincentives for investors, they will pull back and reconsider their options."
CommSec economist Savanth Sebastian said the fall in the number of building approvals was not a surprise given the recent decline in the number of home loan approvals.
"We've only had one month, it is still a hot sector but there does seem to be a few cracks appearing," he said.
"That significant price growth could curtail and looking towards the end of the year - it's certainly not unfathomable that prices may come off a little bit.
"At present it's not concerning because it was coming off some very high levels, but no doubt you'd want to see some healthy growth in supply, the last thing you'd want to do is limit your supply," he said.
"You look at approvals now and they're still up on a year ago, they're still healthy, but it just highlights the impact on those regulations that are coming through."
Mr Sebastian said it was concerning that the slide in approvals was across most of the states.