Home building approvals notch first rise in four months

Home building approvals rose in January offering hope that the construction downturn might be slowing.

A crane operates above the Melbourne skyline.

Homebuilding approvals rebounded slightly in January, offering some relief that what has been a sharp downturn in the sector might be finally slowing.

The rise in January was the first in four months.

The number of Australian home building permits rose 2.5 per cent in from January, from December, but fell 28.6 per cent from a year ago, according to the Australian Bureau of Statistics.

Permits to build private houses rose 2.1 per cent in January, while approvals for apartments and other dwellings rose 2.7 per cent.

House prices have tumbled in Australia since the market peaked in September 2017, with the major capitals of Sydney and Melbourne leading the retreat.

The slide, which is expected to extend into 2020, has seen buyers step back from the market, while credit from banks has been limited by tighter regulation around mortgage lending.

Some economists fear a housing construction downturn will lead to broader impacts on the economy, including a slowdown in consumer spending as so-called negative wealth effects constrain confidence.

The Reserve Bank of Australia moved a month ago to acknowledge growing risks associated with the housing sector retreat. It has adopted a neutral policy stance, abandoning talk that the next move in interest rates was more likely to be up.

GDP growth data for the fourth quarter of 2018 will be published on Wednesday. The data is expected by some economist to confirm the economy slowed sharply through the second half of 2018.

RBA Governor Philip Lowe will also speak Wednesday on the economy and housing, where he may further evolve the central bank’s outlook.

Dow Jones Newswires