Master Builders Australia News

Building industry still in 'Slow lane' despite bounce in dwelling approvals

Written by: Peter Jones, Chief Economist, 10 Jan 2012

Residential building approvals bounced back in November but more rate cuts are needed to turn building activity around, according to Master Builders Australia, the peak body for the building and construction industry.

Mr Peter Jones, Chief Economist, said “With the number of dwelling approvals still down by nearly 20 per cent on a year ago, it remains to be seen whether this monthly bounce in approvals is anything other than of the ‘dead cat’ variety.”

Mr Jones said, “Driving the result in November was a partial reversal of recent declines in unit and apartment approvals as well as an encouraging lift in house approvals needed to combat a worrying trend decline that has set in over the past 18 months.”

He said, “The value of non-residential building approvals fell 2.5 per cent in November and in annualised terms approvals are down a whopping 35 per cent on stimulus program-assisted levels of a couple of years ago.”

“The latest building approval figures are in line with findings of the latest Master Builders’ national survey which reveals that industry profits are under pressure and jobs may go.” 

Mr Jones said, “Builders are reporting falling sales and forward orders as consumer caution, European economic woes and difficulties accessing finance work against any recovery.”

He said, “With the immediate challenge to restore confidence and drive a private sector recovery, the building industry is banking on further rate cuts to help boost confidence and stabilise an uncertain market.”

“Master Builders Australia believes that the November and December rate cuts by themselves won’t be enough and calls on the Reserve Bank to lower rates further to reignite activity in the building industry.”