As building approvals fall, new home buyers in Australia are well positioned to capitalise on soft building conditions, low interest rates and state based incentives in order to purchase new homes, a key building and construction industry executive says.
Commenting on the latest set of building approval numbers, which showed a 4.4 per cent drop in the seasonally adjusted value of new homes approved for construction throughout the country, Master Builders Australia chief executive officer Wilhelm Harnisch said on Monday the building industry was looking to last’s years reductions in interest rate cuts to bolster interest among new home buyers.
“New home buyers are in a unique position to capitalise on the current soft conditions, combined with the reduction of mortgage repayments and many state based incentives when considering home ownership,” he said.
Harnisch said the figures – which appear to contradict the encouraging message associated with a 6.2 per cent seasonally adjusted jump in sales of new homes – confirm that the industry remains in the early stages of the anticipated recovery.
While December’s fall in approvals is for the most part merely a reversal of a 3.4 per cent gain the previous month, HIA senior economist Harley Dale, says longer term figures toward the end of last year confirm the ‘patchy’ nature of any signs of improvement – in terms of both geographic location and type of dwelling.
“It is encouraging to see that despite the monthly dip in December, approvals for other dwellings increased by 12.3 per cent in the December 2012 quarter,” Dale says. “Conversely, it is disappointing that detached house approvals continued to under-perform in late 2012, falling by 1.6 per cent in the December quarter. It is not possible to call a new home building recovery without evidence of a sustained improvement in this segment of the market.”
Both Harnisch and Dale say interest rates may need to fall further yet in order to stimulate any form of recovery, but Dale also stresses the need to address ‘inefficient’ levels of taxation and regulation.
He says clear strategies and policies in this area are needed from the federal government on down if the sector is to provide a meaningful contribution toward economic growth in Australia.
Tasmania was hardest hit by the approvals fall in December, with the seasonally adjusted number of dwelling units approved for construction plummeting 21.7 per cent.
Victoria (down 12.3 percent) and New South Wales (down 1.3 per cent) also registered falls, while approvals rose in Queensland (up 7.9 per cent), South Australia (up 1.7 per cent) and South Australia (up 1.3 per cent).