Building approvals rise in Australia ahead of general election

Building approvals in the private sector in Australia increased by 1.1% in trend terms in July, contributing to a 0.9% increase in the total number of housing units approved, according to the latest data from the Australian Bureau of Statistics.

Approvals in trend terms increased by 12.6% in the Australian Capital Territory, by 4% in the Northern Territory, by 3.1% in Western Australia, by 1.6% in Tasmania, by 1.5% in South Australia, by 0.6% in New South Wales and by 0.1% in Queensland. But they fell by 1.2% in Victoria.

It means that approvals for private sector houses increased for the eighth consecutive month in July, up 2.8% in Western Australia, up 2.4% in South Australia, up 1.8% in Queensland and up 0.9% in New South Wales. Private sector house approvals fell 1% in Victoria, the second monthly fall in a row.

The trend value of total building approved fell 1.1% in July and has fallen for three months. The value of residential building rose 0.7% while the value of non-residential building fell 3.4%.

Building approvals data for July 2013 show stronger performance in the residential construction sector although patches of weakness persist, according to the Housing Industry Association, the voice of Australia’s residential building industry.

‘Following on from June’s disappointing figures, the results for July indicate that the prevailing trend in the sector is one of recovery,’ said HIA senior economist, Shane Garrett.

‘During July 2013, total approvals rose by 10.8% compared with June. This comprised 3.5%  growth in detached house approvals and 23.3% 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% compared with the same period of last year,’ he pointed out.

‘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.

‘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 said.

He also pointed out that this weekend’s federal election outcome is a chance for the next government to focus policy on residential construction which 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 policy makers to tackle the home building industry’s structural impediments,’ said Garrett.