Building approvals out yesterday told us that despite the sharp fall in home prices in the eight major capitals in the March quarter, new home construction is recovering very nicely.
The figures confirm that the first home buyers grant for new homes is definitely having an impact, and is pushing up activity, despite doubts from the Federal Opposition and some critics who can’t see the benefit to a slumping economy from growing activity in one part of the economy that generates jobs and demand.
The Reserve Bank mentioned the higher demand from first home buyers in its post-meeting yesterday which saw rates left on hold for another month.
Reserve Bank figures last week showed that housing credit grew 0.6% in March, unchanged from the previous two months: a small positive, given the sharp falls in business lending and other personal credit.
This was partially confirmed by the latest building approvals from the Australian Bureau of Statistics which showed there had been a rise for two months in total approvals, and four months of rises for private home approvals.
The ABS said the seasonally adjusted estimate for total dwelling units approved rose 3.5% and has now risen for two months (but is still 16.5% down over the year to March).
The ABS said the seasonally adjusted estimate for private sector houses approved rose 2.8% and has risen for four months, while the seasonally adjusted estimate for private sector other dwellings approved rose 2.8%.
The seasonally adjusted estimate for the value of total building approved fell 3.5% in March after a revised increase of 14.0% in February.
The seasonally adjusted estimate for the value of new residential building approved rose 1.1%, while the value of alterations and additions rose 2.2%.
The seasonally adjusted estimate for the value of non-residential building fell 9.8%.
The 2.8% rise in private dwelling was considerably better than the initially reported 0.1% rise for February, showing some acceleration.
Other dwellings approvals slowed from February’s house approvals 34% rise. NSW saw a 4.1% rise, second after South Australia’s 5.2% rise. WA was down 1.9%
Other Reserve Bank figures show that while short term bank bill interest rates remain low, just over the cash rate of 3%, yield on 5 and 10 year bonds have risen sharply in the past week, despite less tension in the markets and more liquidity and lending (the BlueScope Steel $1.25 billion two trance deal today being the latest example).
The yield on the 10 year bond hit 4.70% yesterday, the highest it has been since November of last year. The yield on the 5 year bond of 4.12% is only the highest in a month.
Last Friday’s Performance of Manufacturing Index was poor and this morning’s performances of services index (PSI) was a bit better, but not by much.
It was negative for the 13th month in a row, although it rose by 4.3 index points in April to 39.8 points.
That was the second straight month where a rise was reported, but the index remains well below the key 50 level which separates expansion from contraction.
That though is a bit better than some of the results in last week’s National Australia Bank quarterly business survey.
Meanwhile the April car sales figures form the industry show a 23.9% slump in April sales.
But remember Easter fell in April against March of last year. There was a fall in March 2008 because of the fewer trading days.
This year April had three trading days where business would have been down: Good Friday, Easter Sunday and Anzac Day, while some car outlets were closed on Easter Monday, but not all.
The Federal Chamber of Automotive Industries (FCAI) said that 63,965 new cars and trucks were retailed last month, down 23.9%, from 84,061 in the same month last year.
The slide left sales over the first four months of 2009 down by 20.3% at 276,935. Passenger vehicle sales were down 19.2%, SUVs were off 22.3%, light commercial 19.6% and heavy commercial off a nasty 31.2%.
February sales were down 21.9% on the same month of 2008, so there was a small, but noticeable quickening the rate of decline. April’s Sales were down 8.8% on March.
The FCAI said Toyota was the top selling company in April with 13,033 vehicles ahead of Holden on 7,829 and Ford on 6,836, but Toyota sales slumped 37% in the month, compared with April 2008.
The Holden Commodore was the top selling car with 3,177 retailed ahead of the Mazda 3 on 2,503.
The figures show that car buyers are turning to cheaper brands, with Korean makers Hyundai and Kia reporting increased sales in April, while the rest of the market fell.
Hyundai sales are up by 12% in the first four months of the year, while Kia sales are positive.
