Building approvals rise

Approvals for the construction of new houses rose 5.6 per cent in January in Western Australia, providing a boost for the housing sector.

Nationally, the seasonally adjusted trends figures showed approvals rose 6.8 per cent over the same period.

Commonwealth Bank of Australia economist Gareth Aird said residential building approvals were better than market forecasts of a rise of 0.5 per cent.

“In summary, today’s figures are good,” he said.

Mr Aird said the recent lag between approvals and construction was due to the fact that more apartment blocks were being approved, with construction start times for apartments longer than for houses.

However, he said a pick-up in construction times was now expected.

“The data indicates that a pick-up in non-residential construction is also coming over the period ahead – one of the necessary offsets to the downturn in mining construction,” Mr Aird said.

He said the resulting increase of residential construction would act to restrain house price inflation, and greater investment in homes was a key factor that underpinned the Reserve Bank’s expectation of shifting growth drivers in the economy.

The data from the Australian Bureau of Statistics showed housing building approvals have risen in WA for the past 25 months.

Seasonally adjusted trends remove the effects of normal seasonal influences such as holidays, while trend terms capture longer-term trends.

In trend terms, approvals for the construction of new houses rose 0.7 per cent in January in WA, less than the national average of 1.3 per cent in trend terms.

Nationally, 17,514 new dwelling approvals were granted, just over half of which were for houses.