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Restricted access to finance for first home buyers will remain the biggest barrier to future growth in building approvals as numbers stabilise, according to an economist.
The Housing Industry Association’s economist, Angela Lillicrap, was commenting on the release of ABS statistics when she noted that building approvals remain 2.3 per cent lower than this time last year.
It’s despite the three months to January figures (October to December 2019) showing a 4.9 per cent improvement on the figures from July to September.
For Ms Lillicrap, “data continues to indicate that the residential building market reached a turning point midway through 2019”.
This has been fuelled through cuts to the official cash rate, the economist considered.
The improved figures show “approvals have stabilised at historically high levels”.
According to Ms Lillicrap, the “trough” is comparable with the peaks of previous building cycles, and she noted detached house approvals have a three-month annualised level of 104,076 approvals.
The economist flagged continued house price growth as boosting confidence in the market.
“This, combined with the low interest rate environment, making servicing a mortgage more affordable, bodes well for increased demand for new housing,” she commented.
Despite this projected upswing, Ms Lillicrap has acknowledged future growth in building approvals will be impacted by restricted access to finance for first home buyers.
HIA summarised that in seasonally adjusted terms, building approvals for the three months to January quarter increased in Victoria (+15.3 per cent) and New South Wales (+5.3 per cent).
Queensland (-1.7 per cent) and South Australia (-2.1 per cent) maintained “relatively steady” numbers in comparison to the previous quarter, while notable declines were seen in Tasmania (-10.7 per cent) and Western Australia (-11.0 per cent).