Home building approvals fall in May

The number of home building permits dropped in May, led by a slide in private-sector housing approvals.

Workers at a building site in Sydney. Picture: Richard Dobson

The number of Australian home-building permits fell by 3.2 per cent in May from April, led by a steep fall in approvals for private-sector housing.

Approvals gained 3.1 per cent from a year earlier, the Australian Bureau of Statistics said Tuesday. Permits to build houses fell by 8.6 per cent from a month earlier, while approvals for apartments and other dwellings rose by 4.3 per cent.

Conditions in Australia’s housing market remain mixed. While the pipeline of new projects is strong, prices for residential property have begun to fall.

CoreLogic data on Monday showed house prices have been falling nationally for nine months in a row.

An oversupply of apartments is expected to add to weakness in prices over the coming year, while tighter lending standards and the harsh spotlight of a government inquiry into alleged misbehaviour by banks are also fuelling concerns about a coming credit crunch around mortgages.

A recent rise in money-market borrowing costs has also put pressure on banks to raise mortgage interest rates, something that would further crimp house prices.

The Reserve Bank of Australia is expected to announce no change in its benchmark cash rate at a policy meeting later today, and point to rates on-hold for some time yet.

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