Building Approvals Falter in January
02 March 2010
The very large decline in both residential and non-residential ABS approvals for January is the result of a number of factors, according to Master Builders Tasmania, the peak employer body representing the building and construction industry.
Mr Kerschbaum said, “Residential approvals have really been knocked around as a result of higher interest rates, the withdrawal of the federal government’s first home owner boost scheme and the wind down of the social housing stimulus package. The figure of 203 dwelling approvals is down 27% in seasonally adjusted terms. The large fall has also dipped the trend approvals into negative territory, down 1.6% for the month. Whilst the January figures were expected to be lower, it was not anticipated that the approval figures would be this low.”
Mr Kerschbaum added, “Non-residential approvals have also fallen off a cliff, with January recording only $22.9 million worth of approvals, around half the 2009 average. Again, this result was not entirely unexpected as we have seen pretty well all of the Building the Education Revolution money committed and we are back to more normal approval levels.”
Mr Kerschbaum said, “The January figures are always lower than the average because it is a short month as there is typically little activity for the few weeks of the year. The February results should confirm whether the fall in approvals is just a one off or whether there is a discernable trend developing.”
In concluding, Mr Kerschbaum stated, “Affordability levels are now being tested in Tasmania with land prices and existing house prices at historical highs. If the current levels do not improve, first home owner entry into the market will be thwarted. The outcome of today’s Reserve Bank meeting will obviously have an impact on affordability, but regardless of what occurs today, mortgagees should anticipate official interest rate rises of up to 1 per cent by this time next year.”
Statement by Mr Michael Kerschbaum, Executive Director
For further comment contact Michael Kerschbaum (w) 6234 3810 or (m) 0438 343 810
