This article is from the Australian Property Journal archive
BUILDING approvals have defied market expectations and fallen again in May, down 6.6%, according to the Australian Bureau of Statistics.
The market was expecting the sector to remain steady after approvals declined 14.4% in April. However the numbers remain 26.6% higher than May 2009.
Private sector detached house building approvals increase (+1.7%) and other private sector dwellings fall (apartments, units etc) fell 18.8%.
ANZ economist Amber Rabinov said a point of concern for the supply of residential housing is the trend weakness in private residential dwelling approvals, particularly with private sector house approvals falling for five months in trend terms.
In value terms, building approvals increased 2.7%, with softer approvals occurring in residential (-0.6%) building activity, whilst non-residential building approvals increased 9.1%. In trend terms, total building approvals have fallen for the last four months.
“On the back of the surprisingly weak April building approvals data, continued weakness in May building approvals confirm our view that the housing market imbalance will continue as demand outstrips sluggish supply growth,” she added.
In other ABS news, retails sales rose marginally by 0.2% in May, in line with market expectations, to be 1.2% higher compared to a year ago.
Rabinov said the data provide additional evidence that Australia economic momentum has taken a breather as the economy adjusts to tighter monetary policy and the removal of fiscal stimulus.
Discretionary spending remains particularly weak: growth in sales ex-food rose just 0.2% in May after a 0.1% rise in April to be just 0.4% higher in annual terms. Household goods sales fell 1.4% in the month, while department store sales rebounded just 1% following April’s 2.3% decline, and are now tracking 5.8% below year-ago levels.
“Going forward, we expect consumer spending to remain subdued for many months yet as households adjust to higher interest rates and another hit to their wealth from recent falls in equity prices.
“Slower house price growth also won’t help consumers’ mood,” she concluded.
Australian Property Journal
