Data Diary

Australian building approvals – slower and lower

Posted on 02 March 2010

New residential approvals remain stubbornly on the wrong side of the demand and supply equation – at least if you believe that Australia will continue to grow at the immigration fuelled rates of recent times.  From the ABS:

• The trend estimate for total dwelling units approved rose 1.9% in January 2010 and has risen for 12 months.
• The seasonally adjusted estimate for total dwelling units approved fell 7.0% following four months of rises.

At this rate, new dwelling construction threatens to level out around 150,000, well short of the RBA’s baseline requirement of 165,000 per annum from immigration (note this is an over-simplication – the point is one of order of magnitude).

In order to get back on target for 160,000, we are going to need for things to turnaround tout suite over the next couple of months. This challenge can be seen in the monthly change in the 12 month average that has turned down (again):

The question is ‘what was the demand brought forward by the government’s ill-conceived Boost’?

One other less than positive conclusion from all this is that the continued ramp-up in housing prices is being lead by the established housing segment.  This is not good for the overwhelming majority of the Australian population – I sincerely hope that there are one or two babyboomers who time their exit just right.