Strong building approvals are pointing to a moderate recovery in new home building, according to the Housing Industry Association (HIA).
HIA chief economist Harley Dale said the number of building approvals in the September 2009 quarter confirmed a recovery in home building was underway.
“It is encouraging to see clear signs of a lift in new home building. However, supply side constraints including bottlenecks in the building approvals process, and a lack of breadth to the recovery, are preventing new construction from growing at the rate required to satisfy a rapidly growing population,” Mr Dale said.
Detached house approvals increased by 8.1 per cent over the quarter, while the number of multi-unit approvals increased by 17.5 per cent over the quarter.
“The positive impact of very low mortgage rates and the first home owner [grant] boost drove the increase in detached house approvals over the September 2009 quarter, while the federal government’s Social Housing Initiative played a role in lifting multi-unit approvals,” he said.
“It remains unclear, however, whether trade-up buyers are reentering the new home market in sufficient numbers to fill the breach left by waning first time buyer demand, while private residential investment in new homes is still extremely weak.
“The lack of a broad recovery in new housing is a concern, as are planning delays and reemerging land shortages which form part of a number of supply side obstacles preventing a rapid increase in new housing stock.”
The number of seasonally adjusted residential dwelling approvals increased by 5.1 per cent in Victoria in September, 5.9 per cent in Western Australia, and 3.4 per cent in Tasmania.
Dwelling approvals fell by 1.9 per cent in New South Wales, 1.4 per cent in Queensland, and 3.9 per cent in South Australia.