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The Housing Industry Association, the voice of Australia’s residential building industry, described the figures as being weaker than expected.

Chief economist Harley Dale pointed out that better figures from May and June were narrowly driven, largely by the apartment market. Meanwhile, the profile for detached houses is still very weak with the 2.7% rise in July still leaving approvals in the middle of 2012 nearly 20% below long term trends.

‘Building approvals for detached houses, semi detached dwellings, and units of three storeys are still running at levels considerably lower to those evident in middle of 2011. There is therefore still no sign of a widespread recovery in new housing, and in its own right today’s approvals update takes us in the wrong direction. Indeed, the three new housing updates available to date for July all signal a further deterioration in new housing into 2012/13,’ said Dale.

‘HIA has long held the view that new housing activity will recover as we progress through 2012/13, but only very moderately unless governments lift their game and take action. To get even a mild, and therefore inadequate, recovery we need to see new housing updates far superior to those that have emerged so far in 2012,’ he explained.

In July 2012 total seasonally adjusted building approvals fell by 9.4% in New South Wales, 29.4% in Victoria, 19.7% in Queensland, 1.3% in South Australia, 4.8% in Western Australia, and 4.5% in Tasmania.

In trend terms building approvals increased by 4.4% in the Australian Capital Territory but fell by 7.4% in the Northern Territory.

Meanwhile, the latest housing finance figures published by the Australian Bureau of Statistics show that following a reasonable improvement in June, the number of loans for the construction or purchase of new homes slipped back again in July.

The total number of seasonally adjusted loans increased by 1.8% in Western Australia and 7.8% in the Northern Territory. Total lending fell by 2.7% in New South Wales and was down by 1.3% in Victoria, down by 2% in Queensland, 1% in South Australia, 3% in Tasmania, and 2.8% in the Australian Capital Territory. 

Dale said that there needs to be consistent evidence of improvement in leading indicators such as new home lending and local government building approvals, to provide some hope that conditions will lift sooner rather than later.

‘The evidence isn’t there and that has to be a prominent concern for policy makers. In terms of total owner occupier lending, the moderate recovery in the first home buyer market continues, but is exaggerated because of the low base, and the trade-up buyer market appears to be losing momentum,’ he explained. 

‘On the investment front, what was the barest of recoveries has petered out. At a time of considerable shortage in affordable rental accommodation it is concerning that new residential investment has effectively tracked sideways, at a historically low level, for over six months now,’ he added.

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