Fears are rising that Australia’s improving property market may already have run out of steam.
Figures from the country’s Bureau of Statistics show that the value of building approvals has now fallen for three consecutive months.
The numbers of approved dwellings fell by 4.4% in December with big falls being registered in Tasmania (22%) and Victoria (12%).
The statistics show the falls are patchy since approvals actually rose slightly in Queensland, South Australia and Western Australia.
The Bureau’s figures are being backed up by the Housing Industry Association which says one reason for the fall in new build approvals is that developers are finding the new lending criteria hard to meet which makes funding for new builds tight.
Harley Dale, an economist at the association, said: “Any sign of improvement in building approvals are patchy in geographic terms and for what type the dwelling is.
“The new home building sector is also facing tighter credit conditions along with inefficient and excessive taxation and regulation levels.”
He added that the modest recovery seen last year for new home approvals had now ‘lost its momentum’ and that the country’s government needed clear policies to help stimulate the market.
Australia’s Bureau of Statistics has also revealed that the number of approved home loans is also falling. The number fell by 1.5% in December.
Ben Jarman, an economist at JP Morgan, said that even with Reserve Bank of Australia (RBA) cutting interest rates four times last year there was no evidence of a ‘meaningful’ improvement in the country’s housing sector.
He said: “Despite the rate cuts, borrowers haven’t come back to the market and the economy needs people to buy new homes rather turning over existing stock which then push up prices.”
Doom and gloom
Spiros Papadopoulos, an economist at the National Australia Bank, said the drop of first time buyers is a concern to the housing industry.
He added: “The RBA needs to see investment in new dwellings and most of the momentum is usually from first time buyers so this is another sign of how weak demand is for housing.”
The doom and gloom over Australia’s property sector isn’t being matched by estate agencies which say prices are edging up.
They add that the country’s depressed market should make a recovery later this year and reverse the price falls recorded last year.
That’s the verdict from property data providers RP Data-Rismark which says home prices rose slightly in every major city except Darwin by an average of 1.2% in December.
A spokesman said: “We can see growth in house prices this year of between 3.5% and 4.5% to match their 2010 peak values.”