Australian Building Approvals Surge in March

Building approvals hit a six and a half year high in March on a boost in flats and townhouses, economists say.

Australian building approvals rose 15.3 per cent to 16,383 units in March, seasonally adjusted, from an upwardly revised 14,208 units in February, the Australian Bureau of Statistics (ABS) said on Wednesday.

It was the highest number of monthly building approvals since October 2003 and the first rise in overall approvals since last December.

In the year to March, building approvals were up 51.6 per cent.

With estimates ranging from a rise of 6.0 per cent to a fall of 2.5 per cent, the numbers would indicate that rising interest rates have so far failed to dampen demand.

The median market forecast was for building approvals to have risen 0.8 per cent in the month and 25.6 per cent in the year.

"Unbelievable increase"

Approvals for private sector other dwellings rose 59.9 per cent to 4,558 units in March, while private sector houses increased by 0.5 per cent to 9,779, the ABS said.

"It has been an unbelievable increase there," JP Morgan economist Helen Kevans said.

"Some of it is payback for previous months' weakness.

"Most of that increase has come in other dwellings so that it is in big developments."

Ms Kevans said the other dwelling category, which includes flats, townhouses and non-residential buildings, was a volatile sector.

"Other dwellings was up 60 per cent, so that it is likely to be a few multi-developments that were approved in the month.

"It could be attributed to a backlog of approvals but it is a bit unclear.

"The general trend has been downward in recent months so we are not looking too much into the number."

Easing undersupply concerns

Commonwealth Bank associate economist Sara Hoenig said the surge in building approvals would ease the Reserve Bank of Australia's (RBA) concerns about an under supply of housing across the nation.

"We are seeing concerns of undersupply in the Australian housing market and increased activity in building approvals would be pleasing to the RBA," Ms Hoening said.

A key theme of the RBA's public statements in recent months has been supply side constraints in Australia's housing market.

The International Monetary fund has also said the local market was significantly over valued.

The surge in the apartment building component of the ABS data, which is traditionally volatile, was a sign of good news, she said.

"It does bob up and down quite a bit," she said.

"The RBA have been saying in recent months that there's been an increase in funding flying through to that sector, and that's feeding the very strong result."

Latest NewsAustralian Building Approvals Surge in MarchSunday, 15 January 2017

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