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Release by the ABS of September residential building approvals statistics

The slight rise in today's residential building approvals figures, in seasonally adjusted terms, indicates that the rate of decline of the downturn in housing industry activity may be slowing. The trend remains in decline and activity in the housing sector is still expected to fall further in 1995-96 as it smooths into a trough before activity begins to pick up in 1996-97.

The Australian Bureau of Statistics residential building approval figures for September show that the number of residential building approvals rose in seasonally adjusted terms by 4.5 per cent to 10,908.

The trend estimate, a more reliable indicator of activity which reduces the impact of irregular components, showed private sector house approvals falling marginally in September by 0.4 per cent following adjusted falls of 0.9 per cent in August and 1.3 per cent in July. The trend for total dwellings also fell in September, falling by 2.0 per cent after a 2.7 per cent decrease in August. The trend estimate for total dwelling approvals has now been in decline since August 1994, indicating a peak in building approval activity was reached in July 1994.

After experiencing three strong years of growth, where a record 506,000 dwelling were built, the housing industry is undergoing a period of adjustment in 1995 as activity falls to levels more consistent with underlying requirements for new dwellings.

The latest trend estimates for building approvals are consistent with the direction of forecasts by the Indicative Planning Council for the Housing Industry (IPC), the Government's premier advisory body on housing activity. The IPC expects a significant decline in activity from the 166,300 commencements recorded in 1994-95. The Council forecasts 124,000 commencements in 1995-96, recovering moderately to 133,000 in 1996-97.

The strong levels of housing activity in recent years has absorbed the pent-up demand that existed in the market and has created an oversupply of dwellings. The oversupply, however, is an aggregate figure and masks regional differences which vary considerably. Oversupply estimates of around 37,000 dwellings at 30 June 1995 are dampening activity levels overall.

The IPC expects the oversupply to be absorbed by late 1996, which will result in activity rising again to marginally higher levels.

Contact: Andrew Casey, Brian Howe's Media Office, 06 277 7099