Although seasonally adjusted building approvals for the month of August increased overall by 6.4% levels are still historically low. Approvals for the dominant detached house fell by 1.7% and are down by 4.5% compared with August 2011. Approvals for other dwellings are down 28.4% on a year ago.
‘This profile for building approvals highlights the long road ahead to achieve a robust and sustainable new housing recovery. The remaining four months of updates for building approvals for 2012 will be crucial, because right now there is no compelling evidence pointing to us being on the cusp of a new housing recovery,’ said Harvey Dale, chief economist with the Housing Industry Association.
HIA figures also show that new home sales in Australia fell 5.3% in August, a 15 year low. The number of seasonally adjusted new detached house sales fell by 7% in New South Wales, by 8.6% in Victoria, by 2.9% in Queensland, by 2.6% in South Australia, and by 9.4% in Western Australia.
‘New home sales for August are the latest in a string of soft new housing updates for this financial year, and that follows a very weak year for new home building in 2011,’ said Dale, adding that more interest rate cuts are needed to boost the residential property sector.
‘Without evidence emerging soon of a sustainable recovery in leading indicators such as building approvals the prospect of a third consecutive yearly decline in dwelling commencements, from a starting point of recessionary levels, will come into play,’ he explained.
The HIA believes that new housing is close to being the most heavily taxed sector of the Australian economy. ‘Sadly, with one or two conspicuous exceptions, new housing remains a sleepy hollow when it comes to government policy reform,’ said Dale.
The HIA predicts that the weakness in new builds will spill over into 2013 as rate cuts won’t single handedly generate the new home building recovery Australia requires.
‘Governments have an important role to play in driving reform measures to lower the excessive tax base faced by the sector. In 2012 that reform process remains too slow and in some quarters is virtually non-existent,’ said Dale.
