ONLY two weeks before the start of the reporting season for developers and contracting companies comes news that building approvals are under pressure.
In the latest Australian Bureau of Statistics data, approvals to build new dwellings fell by 1 per cent in December, well short of expectations of a 2 per cent rise.
Already groups such as Stockland, Mirvac and to a lesser extent, Australand, are feeling the brunt of flat housing sales due to investors' caution and lack of developable land.
Real estate analysts have forecast that for the coming reporting season for the six months to December 31, the construction and residential sales divisions for property trusts will be lower.
An economist at CommSec, Savanth Sebastian, said this week that the publication of the latest building approvals data was ''disappointing''.
But he said that with two rate cuts pending the figures should add some impetus to sales and give the housing sector a boost.
It will also help the commercial construction sector. Developers Lend Lease have the biggest project with the planned $6 billion Barangaroo at Darling Harbour.
The group is in discussions with tenants, amid constant speculation that Westpac may not take up space, preferring to occupy sites at 60 Martin Place and the Mirvac-owned tower in George Street near Bridge Street.
''Not only is the private sector underbuilding but even the public sector has virtually shut up shop,'' Mr Sebastian said.
''Just 139 public sector approvals were committed to in December - marking the weakest reading in records going back over 28 years.
''One influence on housing construction that is constantly overlooked is that Australians are making greater use of their big homes. For the first time in a century the number of people per dwelling has been rising and this trend most likely continued over the past 12 months.''
Building approvals is a leading indicator for the housing sector and the lack of approvals is likely to keep activity levels depressed in coming months.
