Home approval boost in January, but trending lower

Home building approvals started the year on a positive note, with an increase of 2.5 percent during January in seasonally-adjusted terms.

Master Builders Australia's chief economist Shane Garrett said the rise in approvals during January follows a run of weak results during the back end of last year.

"Higher density housing in particular has lost a lot of ground over the past 12 months,” he said. 

“During January, the number of approvals for new detached houses rose by 1.9% with a stronger increase of 3.8% on the apartment/units side of the market,” Garrett said. 

“Despite the welcome increase in approvals during January, we are still down by almost 30% compared with this time last year,” he said. 

“The ongoing difficulties in the flow of credit and concerns about the direction of housing policy post-election are having negative effects on home building activity,” Garrett added. 

“Construction is the economy’s largest provider of full-time jobs and the upcoming round of federal, state and territory budgets provides a real opportunity to get us back onto the right track,” he said. 

During January, WA saw the largest increase in total new home approvals (+28.8%), followed by Tasmania (+15.4%) and NSW (+12.0%). 

The largest reductions affected the ACT (-19.8%) and the NT (-8.0%). Approvals also declined in Victoria (-7.9%), Queensland (-3.5%) and SA (-1.5%) during the month.

The raw figures announced by the ABS may be weak. 

In January, dwelling approvals decline 3.2 percent in trend terms.

Approvals for townhouses and apartments fell just over eight percent in trend terms, with private sector housing decline 0.4 percent.