01/04/2009 - 09:17

WA building approvals jump 20% in Feb

01/04/2009 - 09:17

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Building approvals in Western Australia have jumped 20 per cent to a seasonally adjusted 1,644 units in February, new figures from the Australian Bureau of Statistics show.

Building approvals in Western Australia have jumped 20 per cent to a seasonally adjusted 1,644 units in February, new figures from the Australian Bureau of Statistics show.

The increase was from a seasonally adjusted 1,371 units in January.

In the year to February, building approvals fell 15 per cent from 1,939 units.

Nationally, building approvals rose 7.8 per cent to 10,050 units in February, seasonally adjusted, from an upwardly revised 9.327 units in January.

Over the past 12 months, approvals fell 25.5 per cent.

The market forecast was for building approvals to have recorded a rise of 1.5 per cent in February.

ICAP senior economist Adam Carr said the month-to-month jump in approvals indicated the federal government's fiscal stimulus measures were working.

It also inferred the Reserve Bank of Australia (RBA) might hold off on cutting the cash interest rate at its next board meeting on April 7.

"Rates have been cut, lending is rising strongly (so) approvals should pick-up. On the balance of probabilities then it is more likely they'll continue to rise," he said.

"So notwithstanding the fact that approvals were skewed toward apartments - which are volatile - I am looking more at that jump in approvals as an indicator that policy stimulus is working.

"So for the RBA, I wouldn't say the data adds to the case to cut further.

"In fact, given the mixed signals it highlights the wisdom in pausing and allowing more time to assess."

nabCapital senior markets economist David de Garis said the increase in the other dwellings segement was the primary driver for the overall rise in February approvals.

"All of the rise in building approvals was in the apartment sector, which has been very volatile," he said.

"I would not read too much into that as it is month-to-month and the demand in that sector still is moribund."

The central bank has cut the cash rate by 400 basis points to 3.25 per cent, a 45-year low, between September and February.

Mr de Garis said the RBA was likely to leave the cash rate at 3.25 per cent for the second consecutive month when its board meets next Tuesday.

"They are probably going to leave rates on hold next week," he said.

"They have done the heavy lifting so far and it is going to be incremental from here on in."

Westpac said the better than expected building approvals data signalled an improvement in sentiment, even though approvals for private sector houses were up only 0.1 per cent, compared to a 1.2 per cent jump in January.

"That said, the bounce in private sector apartment approvals does suggest some of the hit from the credit crunch on investor demand and via constraints on developer finance, may be starting to end," Westpac said.

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