Building Approvals Fall

Economists have stated that there is no cause for alarm as the number of building approvals fell for the first time in three months in August.

The ABS has announced that Australian building approvals fell 0.1 per cent to 12,126 units in August, seasonally adjusted. The August result was the first monthly decline since May and worse than market expectations of a 2.5 per cent increase.

Chief economist Stephen Walters of J.P. Morgan said the figures were no cause for alarm. They were a little lower than expectations, but all of it was due to the high density dwellings.

The August report was weaker due to a sharp decline in the "private sector other dwellings" which took a downward turn to 11.7 per cent in the month.

Apartments and other multi-unit dwellings had risen by 34.5 per cent and 28.9 per cent, respectively, over the previous two months and were regarded as a volatile sector.

Private sector housing approvals rose 3.1 per cent in August, having shown monthly increases through 2009.

Mr. Walters further added that there was still a big incentive for potential first home buyers to enter the market now.

Mr. Walters also stated that prices would fall after the grants were scaled back in January, but for the present there still is a pretty big incentive with interest rates still fairly low and that is what first home buyers are doing.