Sharp fall in residential building approvals in Australia
01-06-2012
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‘Building approvals have continued to fall over 2012 to date and imply a recessionary level of new residential construction in 2012. That’s not a positive, upbeat outcome to report, but it is a fact which can’t be ignored or denied,’ said HIA chief economist, Harley Dale.
‘The last three months of building approvals confirm HIA’s message that housing starts are heading towards 130,000. That’s a recessionary level of new home building activity with obvious flow-on consequences for Australia’s manufacturing and retail sectors, and employment market,’ he pointed out.
‘Leading indicators over recent quarters have pointed to this poor result and, worryingly, suggest more to come. But the situation can be turned around, but it requires action and that action needs to occur now. HIA once again calls on governments to collectively arrest the looming crisis through tax relief and an injection of investment and funding into the new housing sector. Such an injection will also provide vital impetus to the broader non-resource economy,’ he added.
In the month of April 2012, seasonally adjusted building approvals fell by 8.7% to their lowest level since January 2009. Detached house approvals dropped by 12.2% while approvals for other dwellings fell by 1.7%.
In April 2012 total seasonally adjusted building approvals fell by 46.7% in Western Australia, 27.8% in South Australia, 15.3% in New South Wales, and 2.7% in Queensland. Total seasonally adjusted building approvals increased by 13% in Victoria and by 9.2% in Tasmania. In trend terms total building approvals fell by 19.1% in the Northern Territory and by 0.9% in the Australian Capital Territory.
Meanwhile, figures also reveal that gross spending on housing finance in Australia was $20.3 billion during the month of February, an increase of $1 billion. The latest PRDnationwide Quarterly Economic and Property report found home loan affordability had increased giving home hunters a reprieve and it means that Australian property conditions are once again luring investors.
‘On average, Australian households now need approximately 32.9% of the family income to service their home loan,’ said PRDnationwide research director Aaron Maskrey.
Maskrey said 33.9% of the property market is now investor financed and is expected to increase as rental yields across the nation continue to become more attractive.
The research director, said declines in property values were expected to slow over 2012. ‘Looking at the macro level property market, the reality is that the rate of decline in values have slowed and could be even stagnant,’ he explained.
‘Investors could now be tempted back into the property market as the rate of decline in values erodes away, while the equity market remains not only turbulent, but has provided returns inferior to fixed bonds over the past five years,’ he added.
Maskrey also pointed out that for the month of February 2012, investor financial commitment increased by $400 million to a record $6.9 billion.
