Dwelling approvals decreased in Victoria by 14.2%, in Queensland by 7% and in South Australia by 0.1%, the latest figures from the Australian Bureau of Statistics show. But they increased by 11% in Tasmania, by 3.2% in New South Wales and by 0.1% in Western Australia.
In seasonally adjusted terms, approvals for private sector houses fell 1.5% in October. Private sector house approvals rose in New South Wales by 5.5% but fell by 7.9% in South Australia, by 4.5% in Victoria, by 2.4% in Queensland and by 1.3% in Western Australia.
But there is hope that a cut in interest rates might help bring some tentative life to the sector, according to the Housing Industry Association (HIA), the voice of Australia’s residential building industry.
‘Two interest rate cuts this quarter in October and now December improve the prospects of a tangible recovery emerging in 2013 for both new home building and renovations activity,’ said HIA chief economist Harley Dale.
‘Lower interest rates make a vital contribution to improving conditions for the residential construction industry, but government action is the key. A healthy new home building recovery is a prerequisite to Australia experiencing a successful transition to more balanced growth with less reliance on resources investment,’ he explained.
‘Lower interest rates set the scene for that transition. However, government focus on productivity enhancing policies and taxation reform seal the deal and that focus simply isn’t there,’ he added.
He pointed out that HIA commissioned research released last week highlighted the importance of new housing to the wider economy and the powerful positive impact that productivity improvements and the reduction of inefficient taxation can have not only on construction but on the broader economy.
‘To take just one example, a 1% total factor productivity increase for residential housing is estimated to increase national GDP by $863 million a year. The flow on impact is $4.19 of additional GDP per increased dollar of activity in residential housing. Under a case of less than full employment the impacts are even larger,’ said Dale.
‘It is a long road back to adequately house Australia’s population and to successfully rebalance the nation’s economic growth. Presuming that super low interest rates in a reform less economic environment is all that is required doesn’t get you very far down the road,’ he added.
