The August building approval figures don’t provide any insight on when a sustainable recovery in Australia’s new home building sector will emerge, the Housing Industry Association (HIA) has claimed.
“It is pleasing to see a headline rise in seasonally adjusted building approvals for the month of August 2012 – up by 6.4 per cent,” HIA chief economist Harley Dale said.
“However, the narrow base – a 22.5 per cent rise in approvals for ‘other dwellings’ which only partially recovers the 46.5 per cent loss of the previous month - is obviously less than ideal.”
“Approvals for the dominant detached house segment remain historically weak, declining by 1.7 per cent in August, and are down by 4.5 per cent from August 2011. Furthermore, approvals for other dwellings are still substantially lower than a year ago (-28.4 per cent). This profile for building approvals highlights the long road ahead to achieve a robust and sustainable new housing recovery.”
According to Mr Dale, the remaining four months of updates for building approvals for 2012 will be crucial, because right now there is no compelling evidence pointing to the industry being on the cusp of a new housing recovery.
“The combination of lower interest rates, policy stimulus in New South Wales and Queensland, and a reduction of the bottleneck in Western Australia, should begin showing up soon in consistently positive, albeit modest, outcomes,” he said.
“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.
“A more concerted reform effort for new housing, which is close to the most heavily taxed sector of the Australian economy, would of course be a powerful driver of a more confident outlook,” added Harley Dale. “Sadly, however, with one or two conspicuous exceptions, new housing remains a sleepy hollow when it comes to government policy reform.”
In August 2012 total seasonally adjusted building approvals increased by 30.3 per cent in Victoria, 16.1 per cent in Western Australia, and 1.8 per cent in Queensland.