Australia

Building approvals reverse by 1 per cent in December 2011

THE number of dwellings approved fell 1.0 per cent in December 2011, in seasonally adjusted terms, following an upwardly revised rise of 10.1 per cent in November, according to the latest data from the Australian Bureau of Statistics (ABS).

Dwelling approvals decreased for the month of December in Victoria (-16.7 per cent), South Australia (-9.1 per cent) and New South Wales (-5.0 per cent), but rose in Queensland (24.6 per cent), Tasmania (15.6 per cent) and Western Australia (6.0 per cent) in seasonally adjusted terms.

In seasonally adjusted terms, approvals for private sector houses rose 0.2 per cent in December with rises in Western Australia (6.3 per cent) and Queensland (4.7 per cent. South Australia (-8.3 per cent), New South Wales (-3.7 per cent) and Victoria (-3.4 per cent) all recorded decreases.

The value of total building approved increased 1.9 per cent in December in seasonally adjusted terms, following a decrease of 0.5 per cent in November. The value of residential building increased 1.0 per cent while non-residential building rose 3.3 per cent.

Following the release of the data, the Queensland Government said the results show its Building Boost is working, with Queensland bucking the national trend of a shrinking industry.

"These results tell us what we already know, that the Building Boost is doing what it's meant to do, providing stimulus to the housing construction industry, which provides thousands of Queensland jobs," said Deputy Premier and Treasurer Andrew Fraser.

Master Builders Australia said the fall in dwelling approvals in December justified action by the Reserve Bank of Australia (RBA) to cut rates, despite the RBA'S concerns regarding cost of funds associated with European sovereign debt problems.

"Dwelling approvals are down by one quarter on levels of a year ago, with further RBA rate cuts needed to boost confidence and turn building activity around," said Master Builders' Chief Economist, Peter Jones.

"Builders are reporting falling sales and forward orders as consumer caution, European economic woes and difficulties accessing finance work against any recovery."

The Housing Industry Association echoed the call for rate cuts, with HIA's Chief Economist, Harley Dale, saying now is the time to further lower interest rates and implement fiscal stimulus measures.

"Building approvals in late 2011 imply that housing starts will fall to a level below that experienced during the depth of the GFC, which would clearly be a very unhealthy outcome," Dr Dale said.

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