The Australian residential property market is experiencing a weak number of new housing starts with building approvals barely rising in January 2012, the latest figures to be published show.
Interest rates are too high and the government is not doing enough to encourage construction of new housing supply, according to the Housing Industry Association, the voice of Australia’s residential building industry.
There was a huge jump in new starts in New South Wales, with housing start approvals rising 37.6% but this masks a much more dire picture in the rest of the country, said HIA chief economist Harley Dale.
He pointed out that if you exclude New South Wales from the figures than new housing approvals actually fell by 9% in January.
‘Abstracting from what was a big result for New South Wales, building approvals fell heavily in January this year,’ he said.
‘The profile for building approvals in late 2011/early 2012 continues to imply a level of housing starts comparable to the very weak levels endured around the GFC. It’s hard to call that a bright update for the domestic economy,’ he explained.
‘Australia’s interest rate settings are too high and there needs to be immediate government focus on policy reform to boost flagging levels of new housing supply,’ he added.
He also noted that housing has a large reach into the wider domestic economy in terms of both output and employment and urgent attention is required to turn the new residential building sector around.
In January total seasonally adjusted building approvals increased by 0.9%. Detached house approvals were largely flat in January, rising by 0.3%, while approvals for dwellings excluding houses increased by 2.2%.
Total seasonally adjusted building approvals increased by 7% in South Australia and in trend terms approvals rose by 2.6% in the Northern Territory. They fell by 2.7% in Victoria, by 22.1% in Queensland, by 0.3% in Western Australia, and by 2.9% in Tasmania. The trend number of building approvals fell by 13.9% in the Australian Capital Territory.