Record high building approvals promising a strong 2015

The latest Australian Bureau of Statistics residential building approval figures present a positive outlook, with Master Builders translating them into a strong forecast for the rest of 2015.

Master Builders Australia’s chief economist Peter Jones pointed to the strong increase in the statistics, which actually brings November 2014 to a record high.

“The 7.5% seasonally adjusted increase in total building approvals for November 2014 reflects confidence in the market with the strength of the result slightly above industry expectations reflecting positive momentum,” said Jones.

“The November result was built on strong approvals growth in higher density dwellings in the major cities. The 17.2% seasonally adjusted rise for other dwellings (units and apartments) confirms the changing face of dwelling demand as higher density living becomes increasingly accepted,” he said.

He said that the results point to a sustained pipeline of work over the next 18 months. Effectively, this translates into an increased number of jobs in the residential home building sector. Private sector apartments rose 16.7% and private sector houses dipped 0.3%.

Meanwhile, chief economist for CommSec, Craig James, noted that the year has started with “plenty of promise”, particularly with the Aussie dollar falling, a drop in the petrol prices and a record number of council approvals to build new homes.

“Clearly there is no need for official interest rates to be cut. But with inflation low and numerous uncertainties across the global economy, there is also no need for higher interest rates,” his analysis of the data explained.

“The strength of new building will boost housing supply over 2015 and, in turn, lead to softer growth of home prices. The more balanced housing conditions will remove another problem for Reserve Bank policymakers,” he said.

They expect no interest rate change this year, which will assist the construction industry.