Oz building approvals strengthen in summer

“Following on from June’s disappointing figures, the results for July indicate that the prevailing trend in the sector is one of recovery,” remarked HIA Senior Economist, Shane Garrett.

“During July 2013, total approvals rose by 10.8 per cent compared with June. This comprised 3.5 per cent growth in detached house approvals and 23.3 per cent growth in approvals for multi-unit dwellings. However, if we take a long view, we see that activity in multi-units is under pressure. If we look at the three months to July 2013, multi-unit approvals fell by 8.0 per cent compared with the same period of last year.”

“We are disappointed to see that approvals fell in key states like New South Wales and Queensland during July. The direction of new home building in these large states means that the pace of recovery is still very fragile. On the other hand, it is encouraging to see approvals start to pick up in states like Tasmania, Victoria and South Australia,” he added.

In July 2013, total seasonally adjusted building approvals increased in Tasmania (+24.7 per cent), Victoria (+22.2 per cent), the ACT (+12.6 per cent – trend terms), Western Australia (+9.8 per cent), South Australia (+9.7 per cent) and the Northern Territory (+4.0 per cent). Residential building approvals fell in New South Wales (-6.7 per cent) and Queensland (-4.0 per cent) during July 2013 in seasonally adjusted terms.

Garrett continued: “The general trend of improvement in residential construction is proof positive that the RBA’s rate cuts are slowly fostering expansion in parts of the housing industry. We look forward to further movement on rates in the coming months.”

He concluded: “In the aftermath of this weekend’s federal election outcome, an early policy focus on residential construction will be important to achieving the goal of successful rebalancing of growth in the Australian economy. It is our hope that today’s figures will serve to concentrate minds and encourage policymakers to tackle the home building industry’s structural impediments.”