The number of dwelling approvals increased by 3.1% in February, according to ABS figures released yesterday, but one industry spokesgroup says this only goes to show Australia’s housing market remains on a ‘knife’s edge’.
Master Builders Australia chief economist, Peter Jones, says the headline increase in dwelling approvals gives a false picture of a housing recovery, despite the fact private sector houses rose 0.5%.
Jones, welcomes the improvement, but says he’s concerned that a negative trend has developed.
"Despite the improvement in the seasonally adjusted figures that were buoyed by an unusually high public sector housing figure, a negative trend has emerged in the 'other' dwellings sector (units and apartments). The overall negative trend in approvals is very worrying…Despite green shoots and early signs of a recovery, momentum has failed to build.”
However, HIA economist, Geordan Murray, is more optimistic.
"We have seen indicators of consumer sentiment improve over recent months and we may well be seeing an early sign that this is flowing through to activity on the ground,” says Murray. “After two consecutive months where approval numbers slipped back it is pleasing to see a material improvement in February.”
But Jones says the industry had been hoping for a much stronger recovery to take hold and that the feedback from stakeholders is that conditions are still ‘tough’.
"Time is running out for a sustained recovery in the building industry and the Reserve Bank must consider further interest rate cuts to encourage growth in the non-mining sectors of the economy.”