Solid Dwelling Approvals

Reports this week of a solid bounce in dwelling approvals are welcome news for Australia's new home builders, with an increase of nearly 40 per cent in Queensland more than offsetting a disappointing month in New South Wales.

Australia's peak building industry body, HIA, said that while the NSW situation continues to bow under the weight of high land prices and a BASIX-induced distortion, for the wider industry there is clearly a healthy level of demand.

HIA's Chief Economist, Simon Tennent, said that the positive result is confirmation that the industry has not been overbuilding and that demand is there as long as the price is right.

"For New South Wales however, the market continues to be dominated by trade-up buyers who currently are having trouble selling their existing homes," he added.

"It's a simple equation whereby if established sales volumes are down by 25 per cent and first home buyers continue to be under-represented, the overall falls in the new home market will be somewhat harder than in other states."

"Fortunately for NSW, there have been tentative signs of a slowing in population outflow to other states, and some slight improvement in the land supply situation."

"For the rest of Australia, forecast improvements in housing affordability from stable prices, stable interest rates, and rising household incomes will ensure that this slowdown doesn't reach the depths of previous downturns," Mr. Tennent said.

On a state by state basis, Queensland recorded the biggest increase in dwelling approvals over the month, up 39.4 per cent. They were followed by Tasmania, up 8.9 per cent, Western Australia, up 3.3 per cent, and Victoria, up 1.2 per cent.

Falls were recorded in New South Wales, down 22.9 per cent and South Australia, down 3.9 per cent

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