Building approvals have fallen for the sixth time in eight months, suggesting the Australian economy is not ready for another rate hike.
According to the latest ABS data, total building approvals fell by 4.7 per cent in August 2010 to be down by 12 per cent over the three months.
“Today’s building approvals release for August is a weak update on the new home building outlook and takes the number of approvals to the lowest level since August 2009,” Housing Industry Association chief economist Dr Harley Dale said.
“Building approvals, new home sales, and new home lending figures are unequivocally pointing to renewed weakness in home building in the current financial year, and that’s with interest rates remaining at their current levels.”
Mr Dale said the recent unwinding of fiscal stimulus together with the lagged impact of previous rate hikes has dented new home demand and confidence.
“What this situation unfortunately means is that the recovery in housing starts will be a one year wonder, followed by a resumption of the downward trend that has been evident for almost a decade,” he said.
Seasonally adjusted building approvals in August were weighed down heavily by a 16 per cent drop in New South Wales.
Building approvals also dropped by 10.8 per cent in Tasmania and 1.4 per cent in Victoria.