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Approvals build on May slump -

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PETER CAVE: Approvals to build new homes and apartments rose in June after a slump in May.

Dwelling approvals jumped 9.3 per cent although they're still down compared to the same time last
year.

A big rise in approvals for apartments helped to lift the figures.

The data are traditionally volatile and to crunch the numbers I'm joined by our finance reporter
Sue Lannin.

Sue, what do the figures show this month?

SUE LANNIN: Well Peter the figures show that approvals by public and private authorities for
houses, apartments and town houses has in fact resumed its upward trend.

The overall figure, the seasonally adjusted figure, rose 9.3 per cent from May to June to nearly
11,000 houses and apartments.

Now that was actually above what economists expected. The median forecast of economists from
Bloomberg was an 8 per cent rise over the month from May to June.

It's still, the figures though are still down 14 per cent year on year and really the rise over May
to June is just recapping, recouping most of the falls that we saw in May when approvals were down
11 per cent.

PETER CAVE: What about the approvals since the beginning of June?

SUE LANNIN: Yeah the value of approvals has actually increased and it's been a pretty big increase
overall in seasonally adjusted terms. Total building approvals, the value sorry of total buildings
approved rose nearly 36 per cent. That included a 4 per cent rise in the value of new residential
building.

So it certainly points to the fact that the boost in the first home buyers grant is helping out but
investors also are getting back into the market.

Now the big figure in terms of value was that the value for the approval of non-residential
buildings - that includes offices and warehouses - jumped, in fact jumped 95 per cent.

PETER CAVE: Is it therefore safe to start talking about a recovery in the housing sector?

SUE LANNIN: Well that in fact is the big debate that's going on in economists. We have seen home
loan approvals rise by one-third since the big dip in August last year.

Building approvals were going up in the first few months of this year. They dipped in May. They're
back up again. But it really could be too early to say.

We're seeing some encouraging signs in terms of house prices as well. Now the private sector,
Australian Property Monitors says that house prices rose 3.3 per cent in the June quarter so
they're basically back to levels seen at the same time last year. And we saw the biggest quarterly
rises in Sydney and Melbourne.

But we're still really waiting for the official data from the ABS to come out so their June quarter
figures will be out pretty soon.

As I said we're seeing strong housing finance and of course interest rates at 50-year lows.

But earlier in the week we did see a warning from Reserve Bank Governor Glenn Stevens. He said that
the key challenge would be making sure that this bubble, if it is a bubble, leads to more homes
being built, not housing prices, not higher prices for housing.

And he said it would be very disappointing and in fact quite disturbing if these record low
interest rates and the boost to the first home buyers grant led to a housing bubble.

PETER CAVE: Sue Lannin, live in the studio there.