Building approvals up but housing sector still weak

Although there has been a modest improvement in building approvals during the month of November, the overall state of Australia’s construction industry is still troubled.

Australian residential building approvals had increased during November by 8.4 per cent to 11,424 units.

This compared with an upwardly revised 10,539 units in October, seasonally adjusted.

Economists expectations of this figure were closer to 6.0 per cent.

Unfortunately, while November was a reasonable month, overall domestic construction is still trending down.

There have been some strong declines in September and October and while future interest rate declines should have a positive impact on this, we have not quite seen it as yet.

The RBA had already reduced the cash rate twice at the end of last year, to 4.25 per cent. This has also had a positive impact in the market in demand for home loans.

In the year to November, building approvals were down 18.9 per cent, the ABS said.

But a number of factors needed to be taken into consideration and a another downward trend in equity markets could throw a recovery off course.

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