Building Approvals Point to Muted Housing Recovery
Despite a rise in building approvals in the month of August, builders remain concerned that lower interest rates have so far, failed to lift activity.
Approvals figures released today by the Australian Bureau of Statistics show an overall increase of 6.4 per cent, seasonally adjusted. Private sector houses fell 0.5 per cent after a small gain in July and residential apartments increased 23 per cent after a massive 40 per cent drop the previous month.
Peter Jones, Chief Economist for Master Builders Australia said overall the building approvals figures were disappointing and well below par considering the number of rate cuts over the past nine months.
“After a significant fall in July, the industry was hoping approvals would bounce back and recover lost ground. An overall increase of 6.4 per cent fails to do that.
“The figures show that previous rate cuts by the Reserve Bank have not worked in terms of boosting new home buyers. It vindicates the Reserve Bank’s decision to cut rates again on Tuesday.
“The RBA admits it is cutting rates to try and strengthen the non-mining sectors of Australia’s economy as the resources boom starts to level off. Dwelling and non-dwelling building needs a boost to kick start activity, if it is to play a major role underpinning the economy.
“The banks must now play their part and pass on the rate cuts, in full, to their customers to help stimulate a recovery in the new home buyers’ market.
“Based on other forward indicators, the industry fears that the housing sector recovery will be very muted despite the latest 25 basis point rate cut,” Mr Jones concluded.