Relatively strong building approval data for April released today may have the Reserve Bank of Australia wondering just how deep interest rates are biting out there in consumer land.
The value of new building approvals increased by an unexpected 4.1% in April seasonally adjusted, with the value of new residential building approved up 10.1%.
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The total number of new houses approved also increased by 7.8% seasonally adjusted to 13,570, although this still represents a relatively modest flow of new housing stock on to the market.
While the relatively strong monthly result may give rise to a little doubt in RBA board members’ minds about whether rates need to go higher, ANZ economist Alex Joiner says a bigger concern may be the impact limited supply will have on rents.
“There is only one way for rents to go, and that is upward and at a rapid rate. ‘Advertised’ rents have expanded close to 20% in some capitals in the year to the March quarter. As a result we expect strong rental growth for the next 12 to 18 months at least, and this will continue to flow straight on to the inflation bottom line,” Joiner says.
Balance of payments figures released today show that the current account deficit, seasonally adjusted, rose 4% to just under $19.5 billion in the March quarter, while the deficit on the balance of goods and services rose 22% to just over $8 billion.
And on the markets today, at 12.30pm the S&P/ASX200 is 0.9% down on yesterday’s close to 5614.1 and the Australian dollar is trading at US95.73c.