Building approvals down down under

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The fall in approval rates followed a dip in may, highlighting the “continued vulnerability of residential construction”, said the Housing Industry Association.

“We had hoped that the fall in residential building approvals during May was a blip but today’s figures now show two consecutive quarters of decline. The number of residential building approvals fell by 6.9 per cent during June. This means that the number of approvals is 13.0 per cent lower than twelve months ago,” remarked HIA Senior Economist, Shane Garrett.

In June 2013, total seasonally adjusted building approvals increased in Tasmania (+7.2 per cent), Queensland (+7.0 per cent), New South Wales (+6.7 per cent) and in the ACT (+2.7 per cent in trend terms). During June 2013, building approvals fell in Victoria (-24.3 per cent), the Northern Territory (-11.1 per cent in trend terms), South Australia (-9.6 per cent) and Western Australia (-0.4 per cent).

“Today’s figures from the ABS show particular weakness in the multi-unit segment of the market, with approvals declining by 15.2 per cent in June to a level that is 36.1 per cent lower than twelve months earlier. Approvals for detached houses also dropped slightly during June but have risen by 10.0 per cent compared with a year ago,” added Garrett.

“There had been some signs in earlier months that a housing recovery was underway but today’s figures put a large question mark over that. We continue to see weakness in segments of the market like multi-units as well as in regions like Victoria and Tasmania. As long as this weakness persists, there is no prospect of a broad-based recovery occurring.”

He concluded: “While there is no single solution to the housing industry’s difficulties, today’s figures surely make it imperative for the RBA to cut rates next week,” commented Shane Garrett. “For some time, we have been calling for structural impediments on housing activity to be reduced, including the taxation burden, excessive planning barriers and regulatory costs. The forthcoming election provides a real opportunity for solutions to these issues to be advanced.”