The home-building industry might one day come galloping to the rescue of the Australian economy, but at the moment it’s still in the stable munching on some oats.
That’s despite some promising-looking results from the latest set of building approvals figures.
The value of residential building approvals surged to a record $5.47 billion in November, a sizeable 15 per cent jump after after adjustment for regular seasonal variations.
The rise reported by the Australian Bureau of Statistics on Thursday was dominated by multi-unit developments, where the number of approvals was up by 17 per cent.
Approvals for free-standing homes edged marginally lower for the third month in a row.
Economists have traditionally given less weight to multi-unit approvals, because they were not only very volatile from month to month, but also made up only a small proportion of the total and could safely be ignored.
In the 1980s, for every one apartment, flat, or townhouse built, there were three free-standing homes constructed.
But by the past year, there were only 1.3 houses for every home in a multi-unit block.
One one occasion, September 2013, the number of houses actually exceeded by the number of other dwellings approved, and on current trends that will become commonplace over the coming few years.
So economists can no longer easily look past this increasingly important part of the home-building industry. But that volatility won’t go away.
Apartments are approved in large bundles and that causes the figures to vary wildly from month to month, obscuring the underlying trend.
The big rises in the past two months – the solid gain in November followed an even bigger surge of 35 per cent in October – might easily be reversed.
But its not always easy to spot the trend.
The Australian Bureau of Statistics calculates trend estimates that smooth out the humps and hollows in the seasonally adjusted numbers.
The bureau’s figures on Thursday show the trend in the value of residential approvals – including both houses and other dwellings – is currently heading down at the gradual pace of a half per cent a month, not rising strongly as the seasonally adjusted figures might suggest.
That’s corroborated by another rule of thumb – the average value of approvals over the past three months was $4.87 billion, right in line with the average for the 12 months leading up to that. AAP