June 07, 2011 – A drop in building approvals in April was observed recently.
According to data released recently by the Australian Bureau of Statistics, the number of permits granted to build or renovate houses and apartments has shown a drop of 1.3 per cent in April compared to the revised increase of 8.6 per cent in March, though the decline was slightly better than economists’ forecasts for a 1.8 per cent decline.
With the recent drop in home building approvals on top of the continuing battles of households on higher interest rates, Australians nowadays appear to have put on ice on their plans of building house design or renovating their homes.
Renovation plans for houses have stood in a standstill as Australia’s mixed economy showed a downbeat.
As Australia deals with the complexities of a mixed economy, official interest rates have still stayed the same at 4.75 per cent since November.
A constant softening of the building construction has been forecasted by Ben Jarman, a JP Morgan economist, if in the second half of the year the Reserve Bank of Australia will lift interest rates, in spite of a bounce-back in Queensland as the state rebuilds following the summer floods.
Mr. Jarman said that the building approvals will continue to lose ground if the RBA will lift interest rates combined with a further policy tightening in coming quarters.
The release of the subdued construction data coincided with a warning given to small business owners who borrowed against their homes being at risk due to the softening property market.
According to the chief executive of debtor finance firm Oxford Funding, Rob Lamers, though many small businesses secured loans against property; however, credit would not increase as the business grew.
The recent downturn in the Australian economy has put on hold the various plans of house owners and prospective home design buyers in renovating their homes and buying new homes, respectively.
