The Australian home building industry is recovering strongly, thanks to the 4.25% cut in interest rates since last September and the first home buyer/builders grant which are both feeding the rebound in home construction.
Figures yesterday by the Australian Bureau of Statistics clearly show the size of the rebound: its sizeable and will grow in coming months.
The ABS said that in seasonally adjusted terms, the estimate for total dwelling units rose 5.1% in April and has now risen for three months.
The figures show this was driven by a 7.2% jump in the seasonally adjusted estimated number of approvals for private sector housing, which has now risen for four months.
That’s the impact of the first home buyer’s grants from the Federal and State Governments.
In contrast the ABS reported that the seasonally adjusted estimate for private sector other dwellings approved fell 1.4%, which continues the volatility of that sector, which is more responsive to the lending activities of banks and the general availability of finance.
In fact there has been a 14.6% rise in new private homes approved since last December, while including public housing and private non-dwellings, the rise in approvals since then is 16.7%.
But building approvals were still down more than 16% from April last year, but at the end of last December; they were off 25.5%, so the improvement is palpable.
Private house approvals were 98.5% lower than a year ago, but that’s a huge improvement from the 23.2% fall in the year to last December.
The new confirms the lending figures from the Reserve Bank last Friday for April which showed another solid rise in owner occupied lending.
That should also be confirmed by next week’s housing finance figures for April from the ABS.
The news won’t change the Reserve Bank’s approach to interest rates.
They are sitting pat on the current 3% cash rate, but have a clear bias to cut again with inflation falling and the Aussie dollar rising.
US and Australian 10 year bond rates firmed, but the Australian dollar climbed over 81 US cents to yet another multi-month high. Oil prices reached above $US68 a barrel and stayed there in New York.
The Australian stockmarket was up again yesterday, led by banks and resource stocks (the traditional drivers of good and bad markets in this country).
The market ended up 1.6% and has made a storming start to June and towards the end of the financial year.
In fact the market hit its 2009 high yesterday, which was something of an achievement and has wiped out the huge losses of January to early March.
There may be another rate cut if inflation subsides, but there could also be one if there is a rapid and alarming surge in unemployment in coming months to force the central bank to move.
For the moment rate are steady and that’s very good news for the economy.
While figures out on Monday showed that retail sales in April were positive, the growth rate had slowed from March’s sharp improvement.
These building approvals show that the sector is recovering strongly from the lows of December
The ABS said the "seasonally adjusted estimate for the value of total building approved fell 1.9% in April.
"The seasonally adjusted estimates for the value of new residential building and alterations and additions approved rose 1.7% and 9.2% respectively.
"The seasonally adjusted estimate for the value of non-residential building fell 8.6%."
