Market/Finance News Blog: Record construction activity to buoy economy

By the resi financial blog team, 07 April 2015

Market/Finance News Blog: Record construction activity to buoy economy

The construction sector has played the stalwart in the Australian economy over the past few months and this is showing little sign of letting up. While building has an important part in supplying new homes for the country's booming population, it also creates jobs and keeps the economic wheels spinning by encouraging investment.

The most recent figures from the Australian Bureau of Statistics reveal that building approval figures soared once more in February, falling just short of the record set in January this year. In trend terms, approval numbers rose 1.6 per cent over the month. Approval figures did fall 3.2 per cent in seasonally adjusted terms, but the Housing Industry Association (HIA) says the strong result continues to points to a booming building sector. 

According to HIA analysis, Victoria, NSW and Tasmania saw the strongest growth in new dwelling approvals, at 20.5 per cent, 13.5 per cent and 4 per cent respectively. Nationwide, this is the second-strongest result posted in the 32-year history of building approval statistics. There was an impressive total of 205,796 new dwellings approved over the month, which HIA Senior Economist Shane Garrett says will continue to bolster the property market and, as a result, support the economy. 

"A steady pipeline of new homes represents the most effective solution to alleviating housing affordability pressures," he said in an April 1 release.

"Governments at all levels must work to ensure supply constraints do not impede the continuation of elevated levels of new home construction," he concluded. 

Any future cuts to interest rates are expected to fuel building activity further, which highlights just how important recent discussion about tax reform has proven to be. Removing red tape from the building sector should allow more dwelling approvals to be translated into starts, which will ideally stimulate further growth in the economy.  

Buying into the Australian property market requires a big financial commitment, so ensure you are aware of the range of home loans available to you by speaking with a resi loan specialist