Australia

Dwelling approvals fall 8.7 per cent in April 2012

THE number of dwellings approved fell 8.7 per cent in April 2012, in seasonally adjusted terms, following a downwardly revised rise of 6.0 per cent in March, according to figures from the Australian Bureau of Statistics (ABS) released last week.

Dwelling approvals decreased for the month of April in Western Australia (-46.7 per cent), South Australia (-27.8 per cent), New South Wales (-15.3 per cent) and Queensland (-2.7 per cent), but increased in Victoria (13.0 per cent) and Tasmania (9.6 per cent) in seasonally adjusted terms.

In seasonally adjusted terms, approvals for private sector houses fell 11.1 per cent in April, with falls in Western Australia (-36.7 per cent), South Australia (-26.4 per cent) and Queensland (-11.6 per cent). Private sector house approvals rose in New South Wales (2.0 per cent) and were flat in Victoria.

The value of total building approved fell 5.4 per cent in April in seasonally adjusted terms, and has fallen for 3 months. The value of residential building fell 6.7 per cent while non-residential building fell 2.8 per cent.

The Housing Industry Association (HIA) said the April results send a very negative signal regarding the wider domestic economy and imply a recessionary level of new residential construction in 2012.

"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," said HIA Chief Economist Harley Dale.

Mr Dale said the situation can be turned around, but it requires action and that action needs to occur now.
The HIA called on governments to "collectively arrest the looming crisis" through tax relief and an injection of investment into the new housing sector.

Peter Jones, Chief Economist, Master Builders Australia, said there were significant declines in dwelling approvals in South Australia and New South Wales, but said the substantial fall reported for Western Australia may have more to do with a changed statistical process.

"With the immediate challenge to restore confidence and drive a private sector recovery, the building industry is banking on further rate cuts to help boost confidence," Mr Jones said.

Today, the Reserve Bank of Australia (RBA) took the decision to cut the Official Cash Rate (OCR) by 25 basis points to 3.5 per cent.

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