At the same time that the Reserve Bank announces yet again that it will leave the Official Cash Rate on hold at 5.5 per cent, building approvals posted a positive result in February 2006, thanks to the detached house market.
Building approvals figures released this week show a 2.2 per cent increase overall in the month of February. Detached house approvals increased by 4 per cent to a level of 8,739, while multi-unit approvals fell by 2.2 per cent, the third consecutive decline, to a level of 3,474.
These early signs in 2006 are encouraging, but there is a long way to go to see evidence of a sustained recovery in building approvals, according to Housing Industry Association's Chief Economist, Harley Dale.
"Building approvals for detached houses do seem to have found a base and that is a positive sign for the housing industry," Mr Dale said.
"In an environment of low and competitive interest rates and only mildly weaker labour market conditions, we would hope to see a moderate recovery in detached house approvals and new house sales as we move through 2006."
"Approvals for multi-units are still weakening, and this market looks considerably softer than the detached house market. Underlying economic conditions do not suggest we are heading into free fall, however," he predicted.
On a state by state basis, seasonally adjusted approvals rose by 21.5 per cent in Queensland, by 17.8 per cent in South Australia, and by 6.2 per cent in Victoria. Approvals fell by 21 per cent in Western Australia, by 8.1 per cent in New South Wales, and by 4.4 per cent in Tasmania. In original terms approvals were up by 22 per cent in the Northern Territory and by a whopping 271 per cent in the Australian Capital Territory.
