A fall in residential building approvals in September confirms yesterday’s interest rate cut by the Reserve Bank of Australia was the right call, the Housing Industry Association says.
Figures released today by the Australian Bureau of Statistics showed a national drop of 13.6 per cent in building approvals in September, while in WA approvals fell by 1.5 per cent
In the year to September, building approvals were down 12.0 per cent nationally, the ABS said.
Economists' forecasts had centred on a five per cent fall in approvals in September.
HIA acting chief economist Andrew Harvey said the headline result painted a worse picture that reality, however, with the volatile ‘other dwellings’ segment of the market driving the fall with a 32 per cent decline in approvals.
Detached housing approvals rose by 0.7 per cent for the month of September, for a 1.8 per cent fall over the quarter.
“It does have to be noted that the market conditions surrounding residential building are soft at present – total approvals in the year to September 2011 are down by 9.3 per cent when compared to the year to September 2010,” Mr Harvey said.
“Today’s figures confirm that yesterday’s interest cut was warranted – it was a necessary first step to an eventual recovery in new home building.
“This is not just because it will save around $50 a month off the average mortgage, but more importantly because it should help boost confidence as homebuyers realise rates are no longer on an upwards trajectory.”