Source : Business Times – 2 July 2009
But govt’s stimulus measures expected to drive housing market recovery
Australia’s home building approvals unexpectedly fell in May for the first time in four months as rising unemployment increased concerns over job security and sapped demand for apartments.
Permits granted to build or renovate houses and apartments tumbled 12.5 per cent from April, the biggest drop since November 2002, following the previous month’s 4.1 per cent increase, the statistics bureau said in Sydney yesterday. The median estimate in a Bloomberg survey of 19 analysts was for a 3 per cent gain.
Housing demand may recover in coming months after treasurer Wayne Swan, in his May budget, extended federal government grants to first-time homebuyers until the end of the year. State governments have also unveiled stimulus measures for the property market to help cushion the Australian economy against fallout from the global recession.
‘One thing that may have been driving the weakness may have been that people were waiting for increases in benefits from state governments,’ said Hayden Atkins, an economist at Macquarie Group Ltd in Sydney. ‘The increase in finance probably backs that up. We’re still pretty confident that building approvals will continue to rise.’
Loans provided to consumers to buy property climbed 0.5 per cent in May from April, the central bank reported on Tuesday.
The two-year government bond yield dropped five basis points, or 0.05 percentage point, to 3.96 per cent.
The decline in building approvals was led by apartment permits, which tumbled 43.6 per cent in May from April.
A separate report yesterday showed retail sales rose one per cent in May, twice as much as economists estimated, as government cash handouts prompted consumers to spend more at department stores, clothing outlets and restaurants.
To spur the economy, the Reserve Bank reduced the benchmark interest rate by 4.25 percentage points between September and April to a 49-year low of 3 per cent before leaving it unchanged in May and June.
While consumer spending has ‘held up quite well so far’, it may weaken in the coming months as rising joblessness ’starts to weigh on incomes and willingness to spend’, Reserve Bank governor Glenn Stevens said in a speech on June 4.
Unemployment climbed to 5.7 per cent in May and the government forecasts it will peak at 8.5 per cent within the next two years, which would be the highest rate since 1997.
Mr Stevens said that slower growth and cooling inflation give policy makers ’some scope’ to reduce borrowing costs further if it helps secure ‘a durable upswing’. All 20 economists surveyed by Bloomberg News prior to this week’s economic reports forecast the central bank will leave the overnight cash rate target unchanged on July 7.
Australia joined China and India as one of the few major countries to expand in the first quarter as household spending drove a 0.4 per cent expansion in gross domestic product from the previous three months.
In his May budget, Mr Swan unveiled a A$22 billion (S$25.86 billion) infrastructure-spending programme to upgrade roads, schools and hospitals over four years.
The government of New South Wales, Australia’s most populous state, has slashed stamp duties by 50 per cent on purchases of newly built homes worth up to A$600,000. The policy took effect from yesterday until the end of the year.
Grants by Victoria’s state government mean first-time buyers outside Melbourne can pocket as much as A$36,500 to help purchase a home.
State and federal governments are ‘applying significant stimulus to the construction sector to manage through the global crisis’, Rod Pearse, chief executive officer of Sydney-based Boral Ltd, Australia’s largest seller of building materials, said in a speech last week.
‘Arguably there is still some pain ahead, but clearly Australia has been faring much better than other developed economies,’ Mr Pearse said. He expects that the first home-buyer grants and improved affordability will drive a recovery in the housing market in New South Wales, which accounts for 40 per cent of Boral’s domestic revenue.
Building approvals fell 22.4 per cent in May from a year earlier. Economists predicted a 6.9 per cent decline.
No comments:
Post a Comment