Building approvals have dropped for the second consecutive month.

Approvals fell by 3.4% in April to 16,710, according to Australian Bureau of Statistics (ABS) data, following a 10.5% drop in March.

New South Wales approvals are down the most - 9.5%, followed by Western Australia (-7.4%) and Victoria (-3.9%).

The smaller capital cities had more demand, with Tasmania up by 42.2%, South Australia up 4.3% and Queensland up 0.3%.

ABS head of construction statistics Daniel Rossi says the biggest declines are in the semi-attached dwellings category, which dropped 5.8%.

Higher density approvals are still strong with a 9% increase in apartment approvals.

Despite the monthly decline, approvals are still higher than at the same time last year with total approvals 10.2% higher year-on-year.

Housing Industry Association (HIA) senior economist Tom Devitt says international conflict, budget announcements and rising interest rates are likely to influence approvals in the second half of the year.

“These issues magnify the importance of the role of governments to reduce the cost of delivering a new home to market,” he says.