Recent numbers released by the Australian Bureau of Statistics (ABS) has shown a dramatic spike in home building permits, signalling a genuine recovery in the struggling building and construction industry.
Building approvals rose by 14.4 per cent in September from the previous month, and a 18.6 per cent increase from the same time last year.
Master Builders Australia Chief Economist Peter Jones says the spike is caused by record low interest rates and improving affordability acting to release pent up demand built up over the long period of underbuilding.
“But we are not ‘home and hosed’ yet,” he says.
“Weak jobs growth and rising unemployment can still stymie the recovery.”
Jones adds the increase in building permit approvals is also driven by developers responding to strengthening demand in high rise apartments in Sydney and Melbourne and can be expected to partially tail off next month.
“Nevertheless, approvals in the three months to September are up by twenty per cent over the same three months last year,” he says.
ABS statistics show apartment building permits have jumped 31.8 per cent from August 2013.
Based on the monthly statistics, Jones says the positive trend at the national level has strengthened overall.
“Western Australia continues to be strong with New South Wales playing catch up, Victoria bouncing back and Queensland beginning to recover from a slump,” he says.
“The other states and territories continue to struggle for the most part.”
Jones adds state governments need to act on removing roadblocks such as excessive developer charges; red and green tapes; and poor land release programs to allow for the construction industry to thrive again.
“A long and strong recovery in residential building will be crucial in ensuring a successful rebalancing of Australia’s economy post the resources boom with the Reserve Bank’s monetary policy lever continuing to play a role.”