Apartment downturn hits building approvals

Figures released yesterday show a fall of more than 7% in building approvals for August. However, despite a fall in the August building approvals, which is blamed on a downturn in approvals of apartments and townhouses, MBA Chief Executive Wilhelm Harnisch believes the outlook for the building industry remains positive.

“The small fall in August building approvals was not unexpected given the good results of the past three months and confirm the view that the new homes market is clearly in an upward trend since the late 2002 slowdown.” Harnisch said.

Harnisch pointed to the rise of 20.4% in the previous month to balance the August slide.

However, seasonally adjusted, the total number of dwelling units fell by 2.4% to 14,677 units and were 15.3% lower than last year.

Private sector house approvals also fell by 0.1% to 10,181 dwelling units and were 4.7% lower than the same time last year.

“Private sector house approvals remain close to the peak recorded in August, 2002, whereas other dwelling approvals are around half the peak approved in October, 2002.

“The trend for private sector houses has been strongly up since the trough in early 2003,” Harnisch said.

More than positive was the news that commercial buildings recorded their fourth consecutive rise and are now 18.7% higher than the recent low recorded in April.

“While the current positive economic environment, with low interest rates and ongoing employment growth, continues to underpin the housing market, at this stage of the housing cycle the market is particularly sensitive to the level of interest rates and any precipitous changes could induce increased volatility,” Harnisch said.