The Australian housing industry remains weak, judging by the latest building approval figures released today by the Australian Bureau of Statistics.
Seasonally adjusted the estimate for total dwelling units approved fell 0.7% in June following a revised fall of 7.2% in May. That was worse than the market estimate for a 1% rise. May’s revision was lowered from an initial estimate of a 6.5% fall, indicating there’s a reasonable chance June’s figure could fall when the next set of figures are released.
Even though the fall was lower than in May, the fact that it fell when the market thought a rise was in store shows there’s still downward momentum in home building industry as higher interest rates and lower consumer confidence continue to bite.
June’s figure for total approvals was 7.8% lower than a June 2007. Private houses were up 0.1% compared to June last year but private sector dwellings (apartments etc) were down a huge 22.5% June on June. This series has been very volatile through the year and doesn’t give a solid basis for an accurate comparison.
The ABS said the seasonally adjusted estimate for private sector houses approved was flat in June following a revised fall of 1.6% in May. The seasonally adjusted estimate for private sector other dwellings approved fell 1.4% in June following a revised fall of 19.5% in May.
Over the financial year to June, the ABS said the total number of dwelling units approved in 2007-08 was 158,938, up of 3.6% on 2006-07.
Nationally, the number of house approvals rose 2.8% from the previous year while other dwellings rose 5.4%. The estimate for the total of number dwelling units approved rose in Victoria (+12.8%), Queensland (+5.1%), South Australia (+20.3%) and the Australian Capital Territory (+4.1%) rose while New South Wales -3.0%), Western Australia (-9.9%), Tasmania (-0.3%) and the Northern Territory (-21.4%) fell.
Victoria, Queensland, South Australia and the Australian Capital Territory had rises in both houses and other dwellings while New South Wales, Western Australia and the Northern Territory had falls in both houses and other dwellings.
The ABS said the value of total building approved in 2007-08 rose more than 13% to $76,597.5 million. Both residential and non-residential building approvals showed strong rises. But NSW was the weakest, with not only approvals lower but the value of all approvals as well.
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States and territories other than New South Wales (-0.9%) and the Northern Territory (-9.4%) showed rises in the estimate for the value of Total Residential Building. The Australian Capital Territory (-18.2%) was the only state or territory to show a fall in the estimate of the value for Total Non-residential Building.
The still slowing building approvals and sluggish retail sales add to the impression noted by the National Australia Bank in its latest quarterly business survey that the domestic (non-farm, non-mining) economy is slowing a bit faster than expected.
According to forecasts from the Bank, the economy will slow by more than forecast next year because businesses and consumers will chop back on their spending, which will in turn see the central bank cut rates by a bit more than we have been expecting. The NAB now says the RBA could cut rates by 1.25% in total from next year into 2010 from the present rate of 7.25%. That’s more than the cuts of around 0.75% to 1% that most forecasters have been predicting.
The NAB forecasts that the Australian economy will grow 2.25% next year, lower than the 2.75% it forecast three months ago, but growth in the domestic non-farm, non mining sectors will slow to an annual rate of just 1% in 2009, compared to an earlier forecast for growth of an annual rate of 1.75%.
The NAB said it expects RBA cuts to begin from early 2009 with a cash rate of around 6% by late 2009 or early 2010.