Building approvals fall 4.7%

Australian building approvals fell 4.7 per cent to 13,049 units in August, seasonally adjusted, from an downwardly revised 13,699 units in July, the Australian Bureau of Statistics said today.

Today's data marks the sixth month of falls in the past past eight months.

In the year to August, building approvals were up 4.4 per cent - which is less than expected. Analysts had been predicting a 10.8 per cent increase.

In the private sector, approvals for houses fell 4.3 per cent, seasonally adjusted, down for the third month running. Approvals for other dwellings, including apartments, rose 1.4 per cent in August - rising for the third consecutive month.

"Dwelling approvals surprised most on the downside,’’ said economist Matthew Circosta from Moody's Analytics.
‘‘But high interest rates over (the) second half of last year and the early part of this year has really crimped demand for construction loans, which is weighing on residential building.

‘‘We might see further losses in coming months as interest rates increase...

“Interest rates have smashed construction for housing,” said Mr Circosta said.

“We’ve got a short supply problem anyway and that’s just going to be exacerbated in the coming quarters.”

Mr Circosta said even if home prices are currently levelling off, they would begin to tick up again in coming months if no new homes are built.

That follows data released by the Housing Industry Association yesterday, which showed that new home sales fell by 2.6 per cent in August, the fourth consecutive month of falls.