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Building Approvals Bounce Up, But Have They Peaked?

Posted: December 7th, 2014 | Author: | Filed under: Australian Home Prices | Tags: , , , , , | Comments Off on Building Approvals Bounce Up, But Have They Peaked?


The number of dwellings approved for construction has jumped in the latest official figures. The Bureau of Statistics estimates that more than 17,000 homes were approved in October, seasonally adjusted, an 11.4 per cent increase on the previous month.

That recovered the ground lost in September, when approvals fell around 11 per cent. Apartment approvals entirely drove the latest result, jumping by more than 31 per cent as house approvals fell marginally.

The Housing Industry Association is encouraged by the rise in the number of dwellings approved for construction. HIA senior economist Shane Garrett said approvals have been volatile lately, but there are still healthy signs for the sector ::::

“It’s worth reminding ourselves, of course, that that is in the context of an 11.2 per cent decrease in September, so in many ways we’re back where we were,” Mr Garrett said. “The big picture, really, is that house building activity is at a high level and that’s likely to continue for some time.”

That is a view shared by Citi economists Joshua Williamson and Paul Brennan who are tipping that home building is around its peak.

“Approval numbers remain solid across the components of housing and apartments,” they wrote in a note on the data. But, at the same time, building approval values don’t point towards a further acceleration in dwelling investment above the current rate.”

Reserve Bank holds interest rates for 16th straight month

The Reserve Bank has left interest rates at a record low 2.5 per cent, and they have now been on hold for the equal longest period since the mid-1990s.

It is the 15th meeting and 16th month that the RBA has left rates steady, and it will be 17 months as the bank’s board does not meet in January, barring the possibility of a financial and economic emergency.

The RBA has previously left rates steady for 15 meetings in 2002-03 and, prior to that, for 16 meetings between a rate rise in December 1994 and a cut in July 1996.

There are also no signs in RBA governor Glenn Stevens’s statement that this period of stability will end, with a well worn phrase repeated.

“On present indications, the most prudent course is likely to be a period of stability in interest rates,” he again intoned.

Mr Stevens earlier this year indicated that the removal of this phrase is likely to occur well in advance of a rate move.

Economists surveyed by Bloomberg and Reuters universally expected the decision to stay on hold, with most not expecting rate moves until well into next year.

There were also few surprises in the rest of Mr Stevens’s statement, with the RBA boss again lamenting the high level of the Australian dollar, pointing out that recent falls had generally been only against the US dollar.

“The exchange rate has traded at lower levels recently, in large part reflecting the strengthening US dollar,” he noted.

“But the Australian dollar remains above most estimates of its fundamental value, particularly given the significant declines in key commodity prices in recent months.”

Mr Stevens also noted that the current “very low” interest rates should help economic growth strengthen over time as Australia shifts from a mining investment led economy to one driven by domestic household demand.


RELATED! Does the Building Approval Fall Mark the End of the BOOM?

Building Approval Fall Marks Peak Home Building Boom?Official figures from the Australian Bureau of Statistics – ABS – on new home approvals have raised questions over whether the building boom is peaking. The ABS figures for June show 15,659 new dwellings were given local government go-ahead that month, down 5 per cent from the month before.

Despite the fall, which was more than twice what economists expected, dwelling approvals are still up by a massive 16 percent on the same time last year. The notoriously volatile apartment approvals figure, which is frequently skewed by large developments, fell 10.5 per cent in June, but still remains more than 23 per cent above last year’s level.

Detached house approvals fell a more modest 2.2 per cent at the start of winter, but are also up a more modest 13.1 per cent over the past year. The Housing Industry Association, which represents residential builders, says slow land release is likely to have capped the most recent construction boom.

Despite the downturn in new builds, home prices surged as the real estate market recovered from it’s autumn slump. Overall Australia’s home price boom shows little sign of slowing, with Sydney and Melbourne again driving price gains after a brief lull :: Read the full article »»»»

RELATED! Is Australia’s House Bubble About to Burst?

Is Australia's Property Bubble About to BurstIs the Australian property market ‘in danger of overheating’ According to New York-based ratings agency Moody’s it’s getting mighty close to bursting, and could seriously affect the country’s economy.

Moody’s warns that the Australian property market is in danger of ‘overheating’ and rising housing prices could also jeopardise the country’s economic and financial stability, the agency blames low interest rates for fueling rising house prices, and says the trend can’t continue.

Despite such warnings, house prices continued their rise in the first quarter of 2014, with average year-over-year growth in Australia’s 8 largest cities crawling up to 8.3 percent, marking the highest growth rate in nearly four years.

House prices in Australia’s most populated city, Sydney, rose 16 percent over the past 12 months, while the Melbourne property market increased to 9.9 percent, according to RP Data figures :: Read the full article »»»»

REBLOG! More Pressure on First Home Buyers

More Pressure on First Home BuyersLatest figures from the Housing Industry Association – HIA –  suggest it will become even harder for first-time buyers to enter the housing market, according to the report affordability has waned, and 2014 is likely to see further gains in residential property prices, locking out more first timers.

The HIA’s Affordability Index eased by 0.5 per cent in the December quarter, as the impact of previous interest rate cuts declined. Hobart reported the biggest fall of the capital cities, with a 9.2 percent drop. That was followed by Sydney, down 4.4 percent, Perth, 2.5 percent, the ACT 1.2 percent and Brisbane 1 percent.

However affordability in both Melbourne and Adelaide rose by 5.5 percent during the quarter, the HIA report suggests that addressing the supply of affordable housing is one of the most prominent policy challenges facing all levels of government. In a separate report, population growth has also put pressure on housing affordability :: Read the full article »»»»


source: hia (PDF)
source: rba (PDF)


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