House approvals lift to best levels in two years

House approvals lift to best levels in two years

Posted on Thursday, July 04 2013 at 3:07 PM

The number of new house approvals increased by 2.8 per cent in May – the best level in more than two years.

Around 13,541 new homes were given the go ahead, in a clear sign the
market is turning a corner, according to CommSec. This number is also above the
decade average of 13,362. House approvals are also up by 13.1 per cent over the
past year, while apartments are down 20.5 per cent.

 “Over the past few months, there
have been clear signs of an improvement in housing activity,” CommSec economist
Savanth Sebastian says.

“Low interest rates, strong population growth, healthy employment and
pent-up housing demand is starting to see the housing sector shake off the
shackles and begin a much-needed resurgence.”

CommSec adds the lift in housing construction is also good news for the
Reserve Bank of Australia and leads to greater activity across depressed
housing and retail sectors.

“An ongoing lift in approvals would be beneficial for the broader
economy, given it’s a key forward looking indicator. More approvals lead to
more homes being built over the medium term and will provide additional support
to the overall economic growth.”

In fact, after years of flat growth and low levels of housing approvals,
it seems the market is now rapidly turning a corner.

“The key is ensuring that there’s enough new stock coming onto the
market to prevent an upward surge in prices,” Sebastian says.

“At present it does seem like demand for housing is matching supply and
there’s no reason for concern.”

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