The first building approvals update for 2013 from the Australian Bureau of Statistics indicates that new home building activity will fall short both of Reserve Bank (RBA) expectations and the Australian economy’s requirements, according to the Housing Industry Association.
“Building approvals in January 2013 fell for a second consecutive month, dropping back below the 13,000 mark,” HIA chief economist Harley Dale said.
“The headline January decline of 2.4 per cent would have been weaker if there hadn’t been a 3.3 per cent rise in detached house approvals, a component that continues to miss the mark overall. Even with that monthly rise, approvals for detached houses were still down by 1.0 per cent over the three months to January.
“The signal from leading housing indicators is that if we do see a recovery in new housing starts in 2013 then that recovery will fall well short of what the RBA is looking for. We would hope our central bank is very cognisant of that situation ahead of a decision on interest rates.
“Interest rate reductions are part of the equation, but federal and state governments also have to provide policy solutions to a lack-lustre new home building outlook. If policy makers haven’t woken up by now to the fact that interest rate cuts can’t do all the heavy lifting, then they need a louder alarm.”
In January 2013, total seasonally-adjusted building approvals increased by 3.1 per cent in Western Australia and by 13.6 per cent in Tasmania, while in trend terms approvals posted a 5.3 per cent gain in the Australian Capital Territory.