Australia

Dwelling approvals rise 2.9 per cent in November 2012

THE number of dwellings approved rose 2.9 per cent in November 2012, in seasonally adjusted terms, following a revised fall of 5.1 per cent in October, according to the latest data released last week by the Australian Bureau of Statistics (ABS).

Dwelling approvals increased in November in Victoria (8.7 per cent) but decreased in South Australia (-13.9 per cent), Tasmania (-7.7 per cent), New South Wales (-4.0 per cent), Queensland (-1.5 per cent) and Western Australia (-1.1 per cent), in seasonally adjusted terms.

In seasonally adjusted terms, approvals for private sector houses fell 0.3 per cent in November. Private sector house approvals fell in South Australia (-7.6 per cent), Queensland (-4.9 per cent), New South Wales (-2.2 per cent) and Victoria (-0.2 per cent) but rose in Western Australia (6.8 per cent).

The value of total building approved fell 4.1 per cent in November, in seasonally adjusted terms, and has fallen for two months. The value of residential building rose 2.7 per cent while non-residential building fell 14.4 per cent.

However, Housing Industry Association (HIA) Economist, Geordan Murray, said the positive headline result of a 2.9 per cent improvement in dwelling approvals nationally "overshadows what is a rather poor update for most jurisdictions."

"Victoria was the only state which recorded an increase in dwelling approvals in November, posting an increase of 8.7 per cent. The improvement was driven by a rebound in approvals for multi-unit dwellings after a relatively soft result a month earlier," Mr Murray said.

"Concurrent declines in all other states and territories is concerning, although the modest declines observed in the larger states were insufficient to cause a decline in the national total."

"Lower lending rates in the latter half of 2012 provided one of the necessary preconditions for an improvement in new home building and we are watching for the impact of the state based reforms to first home buyer incentives in NSW, Queensland, South Australia and Tasmania flow through to approvals data over coming months," Mr Murray said.

Master Builders Australia the total number of dwelling approvals rose due to a 10.1 per cent increase in the approval of residential apartments, adding that the result provides tenuous signs of an emerging recovery in residential building.

"November's headline increase in approvals appears to be narrowly based, reliant on an unsustainable spike in inner Melbourne units rather than any broad-based upswing," said Master Builders Australia's Chief Economist, Peter Jones.

"The danger is that the recovery could run out of steam as the impact of previous interest rate cuts appear to have failed in lifting new homebuyer confidence and underpinning a sustained housing recovery.

"Authorities are banking on a strong revival in residential building as the economy loses mining as its key driver. For this to eventuate, the Reserve Bank should cut interest rates at the next board meeting in February," Mr Jones said.

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