Australia’s housing construction industry finished 2015 on a very high note, with home building approvals hitting a five-month high.
Approvals for the construction of new homes rose a better-than expected 9.2 per cent in December, following a horror 12.4 per cent dive the month before.
CommSec economist Savanth Sebastian said the number of approvals in 2015 hit a record high for a calendar year, with the best result for the “first leg in the building pipeline” in 35 years.
“It’s a solid reversal from the previous month and it just highlights that there’s a lot of building work to be done over the next year,” he said.
“It will also bring much more balance to the housing market in terms of supply and demand.”
JP Morgan economist Tom Kennedy warned such big monthly swings should be analysed with caution, saying the longer trends were better indicators of the health of the sector.
“Out of the past six months we’ve had three double digit fluctuations,” he said.
“It’s a very very volatile series, so treat these magnitudes with a grain of salt.”
The gains were driven by a surge in high density approvals, Mr Kennedy said.
Approvals in the other dwellings category, including apartment blocks and townhouses, jumped 12.8 per cent in the month, and private sector houses rose 5.4 per cent.
But Mr Kennedy doesn’t think the momentum can be sustained.
“The construction sector will cool a little in 2016, this number doesn’t change that,” he said.
“We think the underlying theme of moderation and normalisation is likely to prevail this year.”
Over the 12 months to December, building approvals were down 2.5 per cent, the Australian Bureau of Statistics said