The housing shortage could be set to worsen, with building approvals falling more than expected in May.
Figures out today from the Australian Bureau of Statistics show that building approvals fell by 6.5 per cent on a seasonally adjusted basis in May. This more than reversed a 5.4 per cent rise the previous month. Detached house approvals fell 0.5 per cent and multi-unit dwelling approvals were down 18.8 per cent.
The slowdown is not good news for the property sector, which is already facing a housing shortage.
Housing Industry Association chief economist, Harley Dale, said state and federal governments need to look at ways to decrease the cost of new homes - such as reducing taxes and charges and cutting red tape.
“In 2008 to date building approvals have consistently been trending down in six of eight states and territories, the exceptions being South Australia and Tasmania,” said Mr Dale.
Earlier this week HIA released data showing that one million more new homes need to be built over the next five years to meet growing demand.
"The renewed weakness in 2008 for leading indicators such as building approvals highlights the lack of progress in boosting production to begin reducing the acute housing shortage,” Mr Dale said.
JPMorgan economist Helen Kevans said the economic climate was likely to hamper the construction sector in coming months.
"We do think the outlook for the building sector is negative,'' she said. "Building material costs are still elevated and high interest rates are deterring new home building.''
Over the year to May, building approvals rose 0.2 per cent, the Australian Bureau of Statistics said today.
The market forecast was for building approvals to fall by 3.0 per cent.
ICAP senior economist Matthew Johnson said the May data showed an unexpected rise in building approvals in April was just an aberration.
"It pretty much just wipes what looked to be a very unusual increase in April,'' Mr Johnson said.
Building approvals rose 7.8 per cent in April, recording its first month of growth since November last year.
The latest Housing Industry Association's (HIA) new home sales report, released yesterday, found sales of houses and units fell 5 per cent in May.
Detached house sales fell by 5.3 per cent in the month, while multi-unit sales declined by 2.4 per cent.
"The HIA sales are off nearly 8 per cent year-on-year and the building approvals are flat year-on-year so you'd have to expect that the approvals to fall further,'' Mr Johnson said.
"You wouldn't expect that they would be rushing through further approvals to build things that aren't moving,'' Mr Johnson said.
