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Building approvals continue downward momentum

The number of building dwelling approvals in Australia has fallen again, for the 19th month in a row, according to data released by the Australian Bureau of Statistics (ABS).

Dwelling approvals fell by 1.3 per cent nationally in June, with the decrease driven by private dwellings excluding houses, which fell 2.5 per cent in trend terms, according to ABS Director of Construction Statistics Daniel Rossi.

Approvals for private houses also fell by 0.8 per cent.

The Australian Capital Territory saw the biggest fall, with a 4.7 per cent drop, followed by a 3.5 per cent drop in Western Australia, a 2.9 per cent decrease in New South Wales, and a 0.8 per cent drop in South Australia.

On the other hand, the Northern Territory saw a 5.8 per cent increase, with Victoria and Queensland also seeing slight increases.

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In seasonally adjusted terms, total dwellings declined by 1.2 per cent, driven by and 11.9 per cent fall in Tasmania, along with an 8.6 per cent fall in Western Australia and a 5.4 per cent drop in New South Wales. Victoria recorded a 9.7 per cent increase, while South Australia was flat.

The value of total buildings approved saw a 0.4 per cent increase, in trend terms. The value of non-residential building rose 2.0 per cent, while total residential building declined 0.8 per cent.

Master Builders Australia Chief Economist, Shane Garrett, said hopes of a bounce in the home building market following the Reserve Bank of Australia’s June interest rate cut was tempered by the release of the statistics.

“There had been a procession of good news over recent months with a conclusive outcome to the federal election, two interest rate reductions and the passage of income tax cuts in Parliament,” he said.

“There is no sign so far that that we are yet at a turning point in the new home building cycle. Today’s figures seem to indicate that momentum in the market is still downward due to falling house prices and still fragile consumer confidence.

“Australia needs about 200,000 new homes built each year over the coming decades. Today’s figures mean that we are falling further short of this crucial threshold with an increasing risk of us underproviding for our housing needs. Barriers to the supply of new home building like taxes, land shortages and inadequate infrastructure provision need to be tackled with great urgency.”

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