Apartments buoy building approvals

The number of home-building permits rose by 0.4pc in August from July, helped by a lift in apartment approvals.

Apartment approvals are buoying the housing sector.

The number of home-building permits rose by 0.4 per cent in August from July, helped by a lift in apartment approvals.

Approvals to build or renovate houses and apartments declined by 15.5 per cent from a year earlier, the Australian Bureau of Statistics said.

Private-sector house approvals fell by 0.6 per cent in August from July, while apartment approvals rose by 4.8 per cent.

Australia’s housing market continues to be supported by strong population growth and record-low interest rates. Still, after years of robust construction activity, the sector appears to have passed its peak in activity.

The questions now are how will pockets of oversupply, especially apartments, affect the market and how deep will the slowdown become.

So far the signs are that it will remain reasonably shallow. There remains a strong pipeline of construction activity in the bigger states of New South Wales and Victoria.

The Reserve Bank of Australia is expected to keep its cash rate target at 1.50 per cent at a policy meeting today. While recent economic data have been more positive, the RBA has indicated interest rate increases are still some way off.

Dow Jones Newswires