After another set of strong figures for building approvals for June, it’s time to watch all those who doubted the first home buyers grants would stimulate housing rush to proclaim a “bubble” because the Reserve Bank Governor, Glenn Stevens, has warned us against allowing one to develop.

Figures out this morning showed home prices rising again, up 3.3 per cent in the June quarter, according to Australian Property Monitors. Even at the top end of the market, other figures yesterday showed a rise in new homes built last month and a 13 per cent rise over the first six months of the year.

The ABS released figures showing that building approvals bounced back strong in June after May’s one off plunge, especially in non-private dwellings, which completely skewed the previous figures.

The ABS said new home approvals hit a four-year high in June, up 9.3 per cent, with the seasonally adjusted rise in private sector houses rising by 4.9 per cent from May.

The first home buyer’s and builder’s grant, plus low interest rates (and the rising belief they may not last) saw the weakness in May reversed.

The truth is that even though building approvals have picked up strongly from the multi-year lows of December and January, they are still below the levels of a year ago, and the number of approvals for all of the 2009 financial year fell almost 19 per cent from 2008.

And the Australian Bureau of Statistics said the fall in the number of approvals over 2009 also saw the value of those approvals drop by more than 19 per cent.

“The value of total building approved in 2008-09 was $66,608.6m, a fall of 19.2 per cent from the previous year with both residential and non-residential building approvals showing falls,” the ABS said.

Permits for total dwelling units jumped 9.3 per cent after a 27.7 per cent rise in the seasonally adjusted number of new private other dwellings (home units, flats, apartments, townhouses).

The overall rise nearly reversed May’s 12.5 per cent fall, according to the ABS.

The ABS said the performance in June meant the total number of dwelling units approved in 2008-09 fell 18.8 per cent to 132,073, on 2008.

“Nationally, the number of house approvals fell 14.2 per cent from the previous year while other dwellings fell 28.3 per cent.

“The value of total building approved in 2008-09 was $66,608.6m, a fall of 19.2 per cent from the previous year with both residential and non-residential building approvals showing falls,” the ABS said.

But since the low of 9,420 approvals in January, the number of approvals has jumped by more than 16 per cent to 11,086 in June. That was still down more than 15 per cent from June 2008, showing that while the first home buyers grants and low interest rates are having an impact, there’s still a way to go before we get to a full recovery in the sector.

The ABS said that the “seasonally adjusted estimate for the value of total building approved rose 35.8 per cent in June. The seasonally adjusted estimate for the value of new residential building approved rose 4.1 per cent while the value of alterations and additions approved fell 0.6 per cent. The seasonally adjusted estimate for the value of non-residential building rose 94.5 per cent.

That’s obviously been skewed by some huge backlogs of approvals in some local government areas being rushed through by the end of the financial year. That was part of the warning on housing from Governor Stevens this week; the role of local and state governments in hindering the availability of enough land to built enough houses without setting off a bubble-like boom in labour, materials and in home prices.

Peter Fray

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