This article is from the Australian Property Journal archive
THE Reserve Bank has left interest rates unchanged at 4.50% yesterday as building approvals fell by 3.3% in June.
In the monthly statement RBA Governor Glenn Stevens said the current setting of monetary policy is resulting in interest rates to borrowers around their average levels of the past decade.
“The global economy grew faster than trend over the year to mid 2010. The expansion has been uneven, with the major advanced countries recording only moderate growth overall but growth in Asia and Latin America very strong.
“There are indications that growth in China is moderating to a more sustainable rate as policies are now less accommodating. Similar adjustments to policies and growth rates are occurring in other countries in the Asian region,” he added.
“In Europe, while output in some key countries has been improving significantly, prospects for next year are more uncertain given planned fiscal contraction.
“US growth was stronger in the first half of 2010 but the pace of labour market improvement has been slow and the expansion may be somewhat lacklustre in the second half of 2010. Overall, the Bank expects global growth to be about trend over the coming year,” he continued.
Stevens said with growth likely to be close to trend, inflation close to target and the global outlook remaining somewhat uncertain, the Board judged this setting of monetary policy to be appropriate.
Meanwhile the Australian Bureau of Statistics building approvals figures showed a 3.3% decline, which is weaker than the market expectations of 2.0%. In 2010, residential approvals have fallen 12.1% however the sector remains 13.2% higher in the year to June.
Private sector detached house building approvals fell (-2.5%) whilst other private sector dwelling approvals (apartments, units etc) increased 2.7%. In trend terms, private sector detached house approvals have fallen for the last six months, while other private sector dwelling approvals are now running unchanged (0.0% in June).
In value terms, building approvals fell 2.4% in June, with weaker approvals occurring in residential building activity (-5.5% for the month), while non-residential building approvals increased to be up 4.4% in June.
ANZ Bank economists Katie Dean and David Cannington said continued weakness in June building approvals show that the residential pipeline is getting weaker.
“Housing investment will be a drag on the Australian economy over 2011. It also confirms our view that the housing market imbalance will continue as demand outruns sluggish supply growth,” they concluded.
In other news, retail sales rose just 0.2% in June.
Australian Property Journal
