Caution warned on new home building figures

Adam Smith 31 August 2016

risk aheadIndustry bodies have warned against undue optimism following a surge in building approvals.

Figures released yesterday by the Australian Bureau of Statistics showed an 11.3% seasonally adjusted rise in building approvals, driven by a 23.4% rise for multi-unit approvals. In spite of the result, industry figures have warned to exercise caution in interpreting the result.

“It does not mean that the industry is on the cusp of another boom because the approvals will not necessarily translate into actual building activity over the next three to 12 months,” Master Builders Australia CEO Wilhelm Harnisch said.

Harnisch said, however, that the seasonally adjusted increase showed a high level of confidence by the building industry.

Housing Industry Association chief economist Harley Dale also predicted further growth for multi-unit construction, but a gradual decline for detached house construction.

“There is some further spark to semi-detached/townhouse dwellings. This is a market to keep a positive eye on,” he said.

But Dale warned that the short-term outlook for residential building was “narrow from a geographical perspective”.

“Take away New South Wales in particular, but also Victoria, and the light is not so bright. You wouldn’t want anything to happen that derailed confidence in those two markets,” he said.

Dale said the HIA short-term forecast was for a healthy home building market, though with a narrow geographical base and dwelling type.

“Today’s result doesn’t change our view, but does remind us about the uncertain outlook the new home building sector faces, due especially to the record pipeline of work yet to be started for medium/high density dwellings,” he said.

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