Australia’s Housing Industry Association (HIA) has again called for acknowledgement from the central bank that housing approvals are down and an unfavorable interest rate adjustment is only going to make matters worse. Data from the Australian Bureau of Statistics indicate housing approvals dropped 2.4% in January, and signals a dismal start to the year. HIA officials note that interest rate cuts are not the only solution, though, and call for policymakers to do their fair share of the lifting to get the country’s housing market back in the black. For more on this continue reading the following article from Property Wire.
The number of approvals for new homes in Australia fell by 2.4% in January and are below expectations, the latest data from the Australian Bureau of Statistics show.
It is the first update for 2013 and the second monthly decrease in a row with approvals dropping below the 13,000 mark but some parts of the country are doing better than others.
Dwelling approvals decreased 5.8% in Queensland, 3.2% in South Australia, 2.6% in Victoria, and 1.3% in New South Wales. They increased by 13.9% in Tasmania and by 3.1% in Western Australia in seasonally adjusted terms.
According to Housing Industry Association chief economist Harley Dale the headline January decline of 2.4% would have been weaker if there hadn’t been a 3.3% rise in detached house approvals, a component that continues to miss the mark overall. Even with that monthly rise, approvals for detached houses were still down by 1% over the three months to January.
‘The signal from leading housing indicators is that if we do see a recovery in new housing starts in 2013 then that recovery will fall well short of what the RBA is looking for. We would hope our central bank is very cognisant of that situation ahead of a decision on interest rates due tomorrow,’ he explained.
‘Interest rate reductions are part of the equation, but Federal and state governments also have to provide policy solutions to a lack lustre new home building outlook. If policy makers haven’t woken up by now to the fact that interest rate cuts can’t do all the heavy lifting then they need a louder alarm,’ he added.
In South Australia, approvals fell to a five month low with particular weakness in relation to houses. This monthly decline was driven by sharp reduction in house approvals which fell by 11.4% but the performance of multi-unit dwelling approvals softened the blow somewhat by rising 35.2% in the month.
On a quarterly basis, the figures paint a similar picture with approvals down 2% overall. Over the past 12 months, a total of 8,278 approvals were received in South Australia and of this 79% were made up of houses.
‘Overall, these are a disappointing set of figures, especially given that some signs of growth were evident during late 2012,’ said Robert Harding, HIA executive director in the region.
‘While the performance of multi-units is encouraging, the weakness of house building activity is a serious cause for concern. Activity is at a low level by historic standards and rekindling growth in the sector must become a priority for policy makers,’ he added.
The fall of 1.3% in New South Wales is still a healthy result, according to David Bare, HIA regional executive director.
‘To put it into perspective, approvals in NSW have only exceeded 3,500 in five of the last 100 months. While approvals for both detached houses and other dwellings declined over January, both segments were still in a better position compared with a year ago,’ he said.
He pointed out that in the three months to January 2013, detached house approvals were 8.6% higher compared with a year earlier, while other dwelling approvals were a very strong, 36.3% higher.
‘It is pleasing that the housing industry in NSW has started the new year on a far more solid footing than we did last year and I am optimistic about the prospect of carrying on this trend as we progress through the year. NSW still has a substantial undersupply of housing, so there is a long way to go before we could consider the volume of new home building to be meeting the underlying demand,’ he added.
This article was republished with permission from Property Wire.