In the US the Fed yesterday morning said US housing starts were "at a depressed level". At its late January meeting it didn’t single out the crushed housing sector.
In Australia yesterday, housing starts for 2009 and the December quarter were shown to be reacting strongly to the now ended first home buyers scheme.
In fact, despite what some nervous nellies were writing and forecasting last week, housing starts are now growing at their fastest rate since the 2001 boom.
The Australian Bureau of Statistics said dwelling starts rose 15.1% in December quarter to 40,022 units, accelerating from a revised 11% expansion in the September quarter.
But while the annual rate is now approaching 160,000, that is still a long way short of the 200,000 starts a year we need to keep up with demand.
With the ending of the first home buyers’ scheme, housing starts dipped by nearly 8% in January, a situation that was expected.
The ABS said that year-on-year, seasonally adjusted housing starts rose 26% in the December quarter, the ABS said.
New South Wales dwellings starts rose 16.5 % in the quarter, seasonally adjusted. In Victoria, they rose by 15.6%, Queensland starts increased 13.3% and South Australian starts were up 8.7%.
Western Australia was slower, up just 2.3%, while in Tasmania they barely budged, rising only 0.7 per cent in the quarter.
So its no wonder there was a small, but very noticeably upgrade of the housing sector in the minuets of this month’s Reserve Bank board meeting that were released on Tuesday.
Each month the bank reports to the board on each sector of the economy, plus retail sales, growth estimates and other information picked up in the staff dealings with companies and industries.
This month’s minutes said:
"The market for established housing had been very buoyant, with auction clearance rates at high levels, notably in Melbourne. Data for housing prices suggested that nationwide prices had continued to grow at a rate of close to 1 per cent per month in December and January."
The February minutes said:
"The housing market remained fairly buoyant, with private-sector measures suggesting price growth of 10–12 per cent over 2009 and the ABS measure of prices of detached houses having risen by slightly more.
“Prices appeared to have levelled out in late 2009 in lower-priced suburbs."
One word difference (‘very’, replacing ‘fairly’) and some other comments and its clear the Reserve Bank now has housing squarely in its sights.
It will be happy with the strong recovery in housing starts, but wants to see more land made available.
