Australia

Dwelling approvals rise 6.4 per cent in August 2012

THE number of dwellings approved rose 6.4 per cent in August 2012, in seasonally adjusted terms, following a fall of 21.2 per cent in the previous month, according to the latest building approvals figures released last week by the Australian Bureau of Statistics (ABS).

Dwelling approvals increased in Victoria (30.2 per cent), Western Australia (16.1 per cent) and Queensland (1.8 per cent) but decreased in New South Wales (-18.3 per cent), South Australia (-1.0 per cent) and Tasmania (-0.9 per cent), in seasonally adjusted terms.

In seasonally adjusted terms, approvals for private sector houses fell 0.5 per cent in August. Private sector house approvals fell in New South Wales (-10.4 per cent) and Queensland (-3.6 per cent) but rose in Western Australia (11.0 per cent), South Australia (1.4 per cent) and Victoria (0.8 per cent).

The value of total building approved rose 9.4 per cent, in seasonally adjusted terms, after falling for 2 months. The value of residential building rose 9.2 per cent while non-residential building rose 9.8 per cent.

Peter Jones, Chief Economist for Master Builders Australia, said that overall, the building approvals figures were disappointing and well below par considering the number of rate cuts over the past nine months.

"After a significant fall in July, the industry was hoping approvals would bounce back and recover lost ground. An overall increase of 6.4 per cent fails to do that," Mr Jones said.

"The figures show that previous rate cuts by the Reserve Bank have not worked in terms of boosting new home buyers. It vindicates the Reserve Bank's decision to cut rates again on Tuesday.

"Based on other forward indicators, the industry fears that the housing sector recovery will be very muted despite the latest 25 basis point rate cut," he said.

The Housing Industry Association (HIA) said the August building approvals figures do not provide any insight on when a sustainable recovery in Australia's new home building sector will emerge.

HIA Chief Economist, Harley Dale, said approvals for the dominant detached house segment remain historically weak, declining by 1.7 per cent in August, and down by 4.5 per cent from August 2011. He added that approvals for other dwellings are substantially lower than a year ago (-28.4 per cent).

"The remaining four months of updates for building approvals for 2012 will be crucial, because right now there is no compelling evidence pointing to us being on the cusp of a new housing recovery," Mr Dale said.

"The combination of lower interest rates, policy stimulus in New South Wales and Queensland, and a reduction of the bottleneck in Western Australia, should begin showing up soon in consistently positive, albeit modest, outcomes."

More information is available from the Australian Bureau of Statistics website at <http://www.abs.gov.au/>.

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