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Date Published : Wednesday, July 30, 2008
Prospective property buyers on the lookout for a home loan may be interested in figures from the Australian Bureau of Statistics (ABS) that show approvals for new buildings fell in June, despite "strong demand" for new homes.
The ABS report, cited by the Age newspaper, said the economic slowdown and Australia's higher interest rates are hitting the construction industry's ability to pursue additional developments.
Overall, the number of dwellings approved in June was 12,237 - the lowest level since September 2005, the publication said.
Furthermore, it added that news service Bloomberg said last month's figures were 7.8 per cent lower than June 2007.
The declines were worse that economists had predicted, the service added.
According to 4Cast economist Ray Attrill, analysts had expected to see a recovery in June after approvals fell in May.
"The fact that we've seen no bounceback may be somewhat telling that we're seeing tightening financial conditions and they're getting tighter," he said.
Mr Attrill added that the credit crunch meant banks were reluctant to lend, "particularly to the construction sector", which made funding new building work difficult.
The Age said the housing approval statistics, combined with weakening retail figures and depressed consumer spending, "bolster the case" for the Reserve Bank of Australia to cut interest rates from their current level of 7.25 per cent.
It added that ANZ economist Alex Joiner believes the decline in approvals is unlikely to seriously dent demand for housing, which will mitigate the effects of higher interest rates on controlling inflation.
According to recent figures from the Housing Industry Association reported by news.com.au, Australia's population boom means the country will need one million additional homes by 2013.
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