Following recent reports that house prices have fallen in recent months, this week shows that new building approvals are down also, showing another sign that the housing markets are struggling. Australian building approvals fell 12.8 per cent in November, their lowest level since March 2001. The Australian Bureau of Statistics said that approved units fell from 10,983 in October to 9581 in November.
Investors may be feeling shy after 12-year high interest rates, and although rates have fallen in previous months, it may take up to 18 months to filter through to all markets. The private sector is feeling the strain, said RBC Capital Market senior economist Su-Lin Ong.
Despite the market forecast for building approvals to fall just 1.5 per cent, in the year to November, building approvals fell 34.7 per cent.
"The key private sector housing component, which is about three-quarters of the total, was down nearly 10 per cent,'' Ms Ong said.
"What the November data really reflects is the higher interest rates earlier in the year, and that still is flowing through the market.''
The Reserve Bank of Australia may have lowered rates by 3 per cent since September 2008 but this has not encouraged consumers enough, with sales of new homes down 1.1 per cent nationally. Although some states did record small gains in November, other states saw large falls.
Several areas where households are savings money include lower petrol proces, falling interest rates and the cash handouts from the government in December. Although retail spending was up slightly in December, many consumers are choosing to save their extra funds rather than spend.
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