Australia’s housing construction industry has received some encouraging news, with the latest data showing that building approvals and housing construction lending activity edged up during August.

But the pace at which new work is coming in remains subdued by historic standards.

On Tuesday, the Australian Bureau of Statistics released two new monthly sets of data relating to building approvals and lending activity.

Regarding approvals, the data indicates that the seasonally adjusted number of new dwellings that were approved for construction rose by 7.0 percent during the month of August to reach 13,647.

The increase was largely driven by the combination of a 9.4 rise in multi-unit dwelling approvals (units, apartments, townhouses etc.) as well as a 5.8 percent increase in detached house approvals.

Meanwhile, new lending data indicates that the seasonally adjusted number of new loans that were approved to owner-occupiers for the purpose of either constructing a new home or purchasing a newly constructed home increased by 6.6 percent to go from July’s 15-year low figure of 3,957 to 4,221 in August.

The latest data provides further evidence of a stabilisation which has taken hold in the market for new home construction since February.

Nevertheless, the data also reinforces that conditions in new home construction remain extremely challenging.

The monthly reading for dwelling approvals was the sixth lowest on record over the past decade.

That for housing construction lending was the third lowest since the GFC.

The data comes as the Reserve Bank of Australia left official interest rates unchanged at 4.1 percent at its October meeting on Tuesday.

In its statement, the Bank said the decision would allow more time to assess the impact of previous rate increases along with the economic outlook.

Whilst inflation has passed its peak, the bank said that the level of CPI increases are still too high and will remain so for some time yet.

It said that whilst further monetary policy tightening may be required to ensure that inflation returns to its target 2-3 percent range over a reasonable timeframe, this will continue to depend upon data and the bank’s evolving evaluation of economic risks.

Housing Industry Association said that any further increases in interest rates will put further pressure on an already struggling industry.

The impact of the RBA’s tightening cycle is not expected to produce a trough in new house commencements until the second half of 2024,” Devitt said.

“Any further increases in interest rates will deepen and prolong this trough.”

 

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