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Rate hikes slow building market

THE last four interest rate increases had significantly slowed the new housing market, according to Master Builders Australia.

MBA deputy national executive director Wilhelm Harnisch said the rises, and uncertainty about future rises, had severely dented homebuyers’ confidence and resulted in a retreat of homebuyers in May.

WA dwelling approvals fell 2.7 per cent during May, continuing the downward spiral of approvals which started five months ago.

However, the rate of the decline has slowed.

Most of the damage occurred in February and March when a 11.4 per cent decline was followed by a 15.5 per cent decline in approvals.

WA residential building approvals including renovations and alterations were valued at $265 million in May.

Combined with non-residential approvals of $165 million, total WA approvals were worth $430 million.

Government work accounted for almost half of all non-residential work.

Nationally, private sector house approvals fell more than 13 per cent, seasonally adjusted, to 8,038 units.

The largest falls were in South Australia with 23.1 per cent and Victoria with 22.6 per cent.

The number of building approvals in May fell 5.2 per cent to 12,594 dwelling units.

WA accounted for about 13 per cent of of the $3.2 billion worth of national approvals for the month.

Mr Harnisch believed the outlook for homebuyers and builders was mixed.

“The outlook for new home buyers remains positive with first home buyers eligible for a $7,000 Government grant,” he said.

“However, uncertainty about future interest rate directions and the introduction of the GST is likely to result in continuing declines in the new housing market.”

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