Dwelling approvals rise by a stronger than anticipated 9.1% in April: ABS

The total number of new houses and apartments approved for construction in April lifted by a stronger than expected 9.1% to 13,774 dwellings with private sector house approvals trending up strongest in WA, NSW and Victoria, according to the latest ABS data.

This followed a fall of 5.5% in March on a seasonally-adjusted basis.

April’s result was well above economists median expectations of a 4% rise in building approvals in April, according to last week’s Bloomberg survey.

Building approvals are forward indicators of future demand for new houses and apartments and are also factored into RBA decisions about the cash rate.

Private sector housing approvals lifted 2.5% over April and have risen for four months.

In the more volatile apartment market, approvals lifted by 18% following a fall of 9.9% in the previous month.

Year-on-year private total dwelling approvals are up 27.3% with private sector housing approvals up 18.9% and apartment approvals up 37.2%.

Economists had tipped a 22.5% year-on-year total dwelling rise.

Looking at the longer-term trend, the ABS notes that the total number of dwellings approved have risen in April, in trend terms, for the first time in 2013.

Dwelling approvals increased in the Northern Territory (8.7%), Tasmania (2.9%), Western Australia (2.5%), New South Wales (0.7%) and Queensland (0.5%) in trend terms.

They declined in the ACT (-2.2%), Victoria (-1.1%) and South Australia (-0.8%).

Dwelling approval trends have been rising for more than one year in both Western Australia and Queensland (15 months each) while falling for the last nine months in Victoria says the ABS.

Western Australia (1.9%), New South Wales (1.3%) and Victoria (1.1%) experienced the largest rises in private sector house approvals.

In New South Wales the trend has been rising since April last year (13 months). Private sector house approvals rose in Queensland (0.2%) for the first time since February 2012.

“The rebound in April was broad-based, reflecting an increased number of approvals in six of eight states and territories, Queensland and the Australian Capital Territory proving the exceptions,” said HIA chief economist, Dr Harley Dale.

“Over the three months to April 2013 approvals were up everywhere except New SouthWales and Victoria.

“In 2012 we had four out of eight new home building markets in Australia in recession. In that context the recovery implied by the profile for building approvals is very modest, a fact reinforced by the effectively flat trend evident in recent months.

“It is nevertheless vital to be seeing some signs of improvement – approvals suggest an increase in housing starts in the current fiscal year in the order of 7%, which is HIA’s forecast.

“The concern is that the new home building activity implied by a range of leading indicators, including building approvals, does not provide evidence of a durable recovery and certainly does not provide evidence of a recovery commensurate with the requirements of the Australian economy as it transitions away from a disproportionate reliance on resources-related investment

“This situation represents a challenge for state and federal government policy makers. Lower interest rates are delivering some traction for new residential construction. However, a recovery of the magnitude and duration required by the Australian economy will not be forthcoming without regulatory and taxation reform to reduce the excessive and inefficient cost base embedded in the new homebuilding sector,” said Dale.

In value terms, building approved fell 2.7% in April following a rise of 6.1% in the previous month.

The value of residential building rose 3.8% following a fall of 6.4% in the previous month. The value of non-residential building fell 10.3% following a rise of 25.2% in the previous month.

This article first appeared on Property Observer.



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