Building Approvals Fall In December

The number of homes approved to be built has fallen in December, but less than analysts expected, official data shows.

The Australian Bureau of Statistics data showed the number of buildings approved declined a seasonally adjusted 3.3 per cent to 17,753 in December.

The result falls short of forecasts by economists surveyed by Bloomberg, who predicted a 5 per cent fall in approvals during the month.

The figures come after home approvals hit an all-time high in November, when they rose a seasonally adjusted 18,245 approvals in the month. The November approvals were driven by strong numbers in the volatile apartment sector, which have fallen 9.7 per cent in December.

However, over the 12 months to December, building approvals were up 8.8 per cent, the Australian Bureau of Statistics said, far ahead of expectations of an increase of 5.1 per cent.

Approvals for private sector houses were flat in December, and ‘other dwellings’, which includes apartment blocks and townhouses, fell 9.7 per cent after two months of strong gains.

JP Morgan economist Tom Kennedy said a significant fall in multi-unit dwelling was not surprising after gains of 17 and 31 per cent in the previous two months.

“When you look at the composition it was pretty close to what everyone was expecting – quite a high decline in high density approvals,” he said.

Mr Kennedy had expected activity in the housing sector to stay strong in 2015, but now expects only a very mild boost.

But that could be changed by the Reserve Bank of Australia cutting the cash rate.

“You could see some type of resurgence in the property sector and in the construction sector,” he said.

St George senior economist Hans Kunnen was pleasantly surprised by the December building approvals numbers, considering a 7.7 per cent gain in November.

“They’re always volatile, but if you only drop three per cent after an almost 10 per cent rise the month before then you’re getting a heck of a lot of building approvals and that contributes towards jobs and housing activity this year,” he said.

Mr Kunnen said low interest rates are continuing to have an impact on the housing sector.

“It assists the case for not cutting the cash rate but there are a lot of other risks out there that people see and it is hard to know exactly what the Reserve Bank is focusing on,” he said.

This news story is reprinted from www.businessspectator.com.au

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