property update

Originally posted by bbm ↑

From The Herald Sun.

Housing figures falling

07jan03

THE housing boom may not yet be bust but new figures today showed the industry was coming off the boil, with approvals for new homes tumbling 25.6 per cent in November.

The fall wiped out the previous month's leap to eight-year highs and was the largest monthly drop in 20 years, largely driven by a 45.7 per cent correction in approvals for apartments and townhouses.
The figures have see-sawed wildly in recent months but, overall, approvals are down 6.1 per cent on last year and economists said the construction boom might finally have peaked.

The Australian Bureau of Statistics said approvals for private houses fell to their lowest level in almost 18 months, dropping 11.6 per cent in the month and remaining 14.9 per cent lower than last November.

The total value of building work approved fell to $4.2 billion, with a drop in residential approvals partly offset by a 27.7 per cent rise in the value of commercial work.

Experts have been predicting a housing slowdown for months, saying two years of solid rises has soaked up almost all first-home buyers and led to a glut of inner-city apartments.

Without the extra stimulus from the first-home buyers grant, which reverted to $7,000 on July 1, the housing market is expected to weaken in 2003 although continued low interest rates will soften the landing.

AMP Henderson senior economist Simon Doyle said there was a clear downwards trend emerging behind the monthly volatility.

"Everybody had been talking about housing slowing and the indicators continued to defy that, so the fall in the November number is suggesting that slowdown may be coming through," he said.

But Commonwealth Bank chief economist Michael Blythe said it was too soon to say if the boom had ended, given the conditions that attracted investors in the first place were still there.

"Interest rates are still low, and they don't look like going anywhere any time soon," he said.

"So we may be at the peak but I don't think we can rule a line off definitively as yet."

Home buyers have enjoyed a six-month breather from rate rises and the Reserve Bank has another month to go before its first interest rate musings for the new year.

Master Builders Australia chief executive Wilhelm Harnisch urged the bank to keep rates low, although he said builders would not suffer over the coming months.

"Despite the fall in November, most builders remain upbeat about the next six months with plenty of work in the pipeline and new orders still relatively strong but easing," Mr Harnisch said.

Housing Industry Association chief economist Simon Tennent said the November fall was in line with an industry coming off a peak in the building cycle and returning to a more sustainable level.

"Despite a forecast slowing in demand from investors, the influence of stable low interest rates and solid population growth will soften the landing for home builders over the year," he said.