The Australian Bureau of Statistics (ABS) released building approvals data for April 2014 earlier this week. The number of dwelling approvals came in well below expectations recording a -5.6% monthly fall with house approvals -0.3% lower and the more volatile unit approvals -14.0% lower.
A lift in dwelling construction was a key element as the economy transitions away from large infrastructure projects related to the commodities sector, however, approvals (most of which result in construction eventually) have now fallen for 3 consecutive months and in 6 of the past 7 months.
Year-on-year, dwelling approvals are only 1.1% higher with house approvals 16.5% higher and the much more volatile unit approvals -16.6% lower. On an annualised basis approvals remain strong however, the recent weakness is clearly a cause for concern.
Over the 12 months to April 2014, there have been 188,503 total dwelling approvals which is up 16.5% higher over the year and at its highest level since January 1995.
The ABS also released the National Accounts for the first quarter of 2014 earlier this week. Over the first quarter, gross domestic product (GDP) surprised on the up side, rising by 1.1%, which was the largest quarterly increase since March 2012.
Over the year GDP growth was recorded at 3.5% which was its highest reading since 3.8% over the year to June 2012 and well above the official forecasts from Federal Treasury.
Over the year, the biggest contributors to economic growth were: exports (2.3 percentage points), domestic demand (1.6 percentage points) and household consumption (1.5 percentage points).
The largest detractors from growth were: building investment and inventories which both detracted 0.7 percentage points from growth.
While GDP was strong over the quarter, the risks from here are that the terms of trade are weakening and export prices are likely to fall plus consumer sentiment has tumbled post budget which may potentially impact on household consumption.[sam id=43 codes=’true’]
The National Accounts data also highlighted that the household saving ratio was recorded at 9.7% up from 9.6% the previous quarter but down from 10.7% at the same time in 2013.
The Reserve Bank (RBA) board held its monthly monetary policy meeting this week and decided to keep official interest rates on hold at 2.5% for the 10th consecutive month.
The statement following the meeting noted that: ‘In the Board’s judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates.’ This means rates are likely to stay on hold for some time yet.
Weekly Clearance Rates
Auction activity increased last week with 3,072 auctions across the combined capital cities, up from 2,786 the previous week. The weighted average capital city auction clearance rate was recorded at 66.4% last week which was down from 67.1% the previous week.
Melbourne is the country’s largest auction market and the clearance rate was recorded at 65.4% which was down from 66.6% the previous week. Melbourne auction volumes were higher last week (1,356) than over the previous week (1,211).
Across Sydney, 1,316 auctions were held and the clearance rate was recorded at 73.0% compared to 1,115 auctions and a 73.1% clearance rate over the previous week. Auction volumes are set to be much lower over the current week, with 1,073 capital city auctions currently scheduled.
Weekly Advertised Listings
Over the four weeks to 1 June, there were 42,463 newly advertised properties listed for sale nationally. The number of newly advertised property listings fell by -5.3% over the week and they are currently 10.1% higher than at the same time last year. Across the combined capital cities, new listings were -5.8% lower over the week and 14.9% higher than a year ago.
There are currently 248,797 properties listed for sale across the country. Total listings at a national level were virtually unchanged over the week and are 0.2% higher than they were at the same time last year.
Across the combined capital cities, total listings have increased by 0.2% over the week however, they are -3.3% lower than they were at this time a year ago. Capital city listings account for just 42% of all listings nationally.