Interest rate jitters early this year has seen a slowing in building approvals in February and is likely to fall back further as the interest rate rise announced on 2 March begins to impact.
This is the assessment of Master Builders Australia (MBA), the peak body for the building and construction industry.
“[Last Friday’s] ABS data pre-dates the RBA’s decision to raise interest rates, which will further affect the highly interest-rate sensitive residential market, as well as tempering investment in the non-residential building market, and will become evident over the next three months,” chief executive Wilhelm Harnisch said.
The total number of dwelling units approved, seasonally adjusted, fell by 0.5 per cent to 13,127 units and were 10.1 per cent lower than the same month last year.
Private sector house approvals fell by 3.4 per cent to 8543 dwelling units and were 10.6 per cent lower than the same time last year.
The more volatile private sector ‘other dwellings’ (apartments and townhouses), increased by 11.5 per cent, and were 6.8 per cent lower than last year.
Private sector housing was shown to be very vulnerable, with dwelling approvals down 10.6 per cent on the same time last year and with the most recent rate rise yet to impact.
According to Harnisch, non-residential building approvals, which tend to show large movements from month to month, rose by 15 per cent in February, but with the trend in approvals continuing its decline since October 2004.
“The February building approval figures do not strengthen the case for a further rate rise. Another rate rise will further worsen housing affordability, turn the current decline into a ‘bumpy’ landing and with it, reduced profits and job losses in the building industry,” he said.