The 4.25% cut in interest rates and the first home buyer/builders grant continues to feed the rebound in home construction.
Figures released this morning by the Australian Bureau of Statistics confirm the building boom is alive and growing.
The ABS said that in seasonally adjusted terms, the estimate for total dwelling units rose 5.1% and has now risen for three months. The figures show this was driven by a 7.2% jump in the seasonally adjusted estimated number of approvals for private sector housing, which has now risen for four months.
In contrast the ABS reported that the seasonally adjusted estimate for private sector other dwellings approved fell 1.4%. In fact there has been a 14.6% rise in new private homes approved since last December, while including public housing and private non-dwellings, the rise in approvals since then is 16.7%.
But building approvals were still down more than 16% from April last year, But at the end of last December, they were off 25.5%, so the improvement is palpable. Private house approvals were 98.5% lower than a year ago, but that’s a huge improvement from the 23.2% fall in the year to last December.
The news confirms the lending figures from the Reserve Bank last Friday for April which showed another solid rise in owner occupied lending. That should also be confirmed by next week’s housing finance figures for April from the ABS.
The news won’t change the Reserve bank’s approach to interest rates. They will sit pat on the current 3% cash rate, especially after another strong night on global markets and the way the US in particular blithely accepted the collapse of General Motors in the biggest industrial failure in US history.
US and Australian 10 year bond rates firmed, but the Australian dollar climbed over 81 US cents to yet another multi-month high. oil prices reached above $US68 a barrel and stayed there in New York.
The Australian stockmarket was up again this morning with the rise on its way towards 2%, for the second strong day of trading, led by banks and resource stocks (the traditional drivers of good and bad markets in this country).
There is simply no need for another rate cut here and it will have to take a rapid and alarming surge in unemployment in coming months to force another one out of the central bank. And for the moment, that’s very good news for the economy. From now on rate cuts will signal that the RBA sees a worsening in the economic outlook.
While figures out yesterday showed that retail sales in April were positive, the growth rate had slowed from March’s sharp improvement. These building approvals show that the sector is recovering strongly from the lows of December.
The ABS said the “seasonally adjusted estimate for the value of total building approved fell 1.9% in April.
“The seasonally adjusted estimates for the value of new residential building and alterations and additions approved rose 1.7% and 9.2% respectively.
“The seasonally adjusted estimate for the value of non-residential building fell 8.6%.”