There was a 7.8% decline in approvals for new homes, taking them to their lowest level since March 2009 and are set to fall further.
‘We have warned for some time of the risk that new home building activity will again plumb the depths experienced around the time of the global financial crisis. Building approvals are signalling that this outcome is unfolding in 2012,’ said HIA chief economist Harley Dale.
Seasonally adjusted detached house approvals fell by 3.1% while approvals for other dwellings dropped by 16.6%. They plummeted in New South Wales, a fall of 41.2%. They were down 13% in Queensland, down 10.5% in Tasmania, down 10.2% in South Australia, down 5.7% in Western Australia, down 1.4% in the Australian Capital Territory and down 1.1% in Victoria.
‘Even allowing for New South Wales virtually driving the entire fall, it is, quite frankly, woeful. It is difficult to be positive about the short term prospects for new housing,’ said Dale.
‘Current policy settings are failing the housing industry and therefore the wider Australian economy. The time for contemplation is over. Australia’s interest rate settings are clearly too high and there needs to be immediate federal and state government focus on policy reform to boost flagging levels of new housing supply, a key driver of domestic economic activity and employment,’ he explained.
‘February’s building approvals update is heavily weighed down by a 41% drop in New South Wales, just as the positive result for January was heavily boosted by a 36% rise in New South Wales. However, the trend in building approvals is flat to down in every state and territory with the exception of Queensland, which is recovering from an extremely low base,’ he added.
The dismal figures come at a time when sales of new home are rising. They were up 3% in February, according to the HIA JELD-WEN new home sales report. Detached house sales grew by 2.2% while multi-unit sales rose by 10.5%.
Western Australia saw an increase of 12.8% in new detached home sales in February, New South Wales saw a 5.3% rise, Queensland a lift of 3.5% and South Australia was up just 0.3%. In Victoria detached home sales fell 7.4%.
Dale said that with interest rate settings are too high, finance conditions persistently tight, consumer and business confidence too low, and plans to tighten fiscal policy inappropriate, it is hard to envisage a sustained recovery in new home sales in coming months.
‘However, the beginning of a recovery seems evident in Western Australia, and the prospect of policy reform in New South Wales and Queensland increases the likelihood of a lift in new home sales volumes in these states through 2012/13,’ he said.
