The number of residential building approvals posted an ‘encouraging’ bounce-back in April, according to Housing Industry Association (HIA) chief economist, Harley Dale.
"Following a disappointing 5.5% dip in March, the number of seasonally adjusted residential building approvals increased by 9.1% in April 2013. 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. Over the three months to April 2013 approvals were up everywhere except New South Wales and Victoria," he says.
"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,” says Dale, “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 home building sector.”