Australian building approvals unexpectedly fall 0.1%

SYDNEY: Australian home-building approvals unexpectedly fell in August, a sign the effect of government stimulus measures may be waning.

The number of permits granted to build or renovate houses and apartments dropped 0.1% from July, when they gained a revised 6.6%, the Bureau of Statistics said in Sydney on Sept 30. The median estimate of 15 economists surveyed by Bloomberg was for a 2.5% rise.

Central bank governor Glenn Stevens will probably keep the benchmark interest rate at a 49-year low of 3% next week to stoke domestic demand, according to 16 of 17 economists surveyed by Bloomberg News. Approvals surged in the first half of the year after the government tripled grants to A$21,000 ($18,300) for first-time buyers of new dwellings.

Any sign “of weakness would most probably defer policy tightening” by the Reserve Bank of Australia, Matthew Johnson, an economist at UBS AG in Sydney, said ahead of the report.

Building approvals were unchanged in August from a year earlier, the Sept 30 report showed. Economists tipped a 1.5% gain.

The report also underlines the central bank’s concern that rising house prices in Australia may not spur an increase in new construction.

“It is becoming well understood that supply side factors, in addition to the well-known demand side ones, have contributed to the relatively high level of housing prices in Australia,” Anthony Richards, head of economic analysis at the central bank, said on Sept 29. – Bloomberg LP