Building approvals hit record highs

Building approvals hit record highs

Posted on Tuesday, December 03 2013 at 5:22 PM

Figures released by the Australian Bureau of Statistics reveal Australian building approvals reached record levels in October.

Craig James, the chief economist at CommSec,
says the numbers show the industry is on the move.

“In trend terms, the value of building approvals
hit a record high of $7.61 billion in October, with residential building also
at record highs.”

He says the release
flags construction’s increasing importance in a moving national economy.

“Housing construction is taking over from mining as the driver of
economic growth.”

The number of apartment approvals also hit record highs in the month.

Dwelling approvals fell by 1.8 per cent in
October after rising by 16.9 per cent in September, with approvals now up 23.1
per cent over the year.

“Given the volatility in the data, the trend is
clearly your friend, and the trend data not only shows apartment building at
record highs, but the value of all building – residential and commercial – at
record highs.

“Simply, supply (construction of new homes) is
lifting to meet demand, putting downward pressure on prices.”

James says the results should compel the Reserve
Bank of Australia to keep interest rates on hold.

“In short, no change in interest rate settings
is required.”

The results support comments from Michael Knox, the director
of strategy and chief economist with RBS Morgans, who believes the Australian
economy is in a “growth recession” because past policymakers overestimated the
sustainability of the mining boom.

says interest rates will remain low for the next two to three years at least,
and this bodes well for property.

is the housing sector that, for the first time in half a generation, we will be
relying upon to get us out of this growth recession.”

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