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Statement ... on ABS July building approval statistics

Figures released today by the Australian Bureau of Statistics show the 1994-95 year has begun with a slowdown in housing activity from historically high levels in 1993-94.

According to the Australian Bureau of Statistics, the total number of dwelling units approved, in seasonally adjusted terms, declined by 5.1 per cent in July 1994 to 15,338.

In trend terms, private sector house approvals fell by 0.1 per cent in July following growth of 0.2 per cent in June and 0.5 per cent in May.

The total number of dwellings rose by 0.2 per cent in July after increases of 0.6 per cent in June and 0.8 per cent in May.

The decline in trend terms for private sector houses is the first fall in this series for three and half years and signals the peaking of approvals in this sector.

Total approvals have recently been held up by the strength in the public sector and other residential buildings during the June quarter. However, these sectors also showed decline during July.

Approvals for July indicate the housing sector is at a peak prior to a gradual decline expected during 1994-95.

Other leading housing indicators also point to activity having reached a plateau.

The Indicative Planning Council for the Housing Industry (IPC) has today released its latest estimate of underlying dwelling requirements, which shows an average level of new dwelling requirements of 140,000 per year up to 1997-98.

The IPC has forecast dwelling commencements will return to levels more consistent with underlying requirements, with forecast commencements of 150,000 in 1994-95 - down from the 1993-94 peak of around 177,000.

The current housing cycle continues to be unique in that increasing activity levels have been sustained over a period of three years without significant inflationary pressures.

Recent increases in the prices of building materials of only 3.7 per cent in the year to June 1994 compare to increases of up to 10 per cent at the peak of previous housing cycles.

The low inflationary pressures are good news for the economy as recent capital expenditure statistics show the business cycle is now picking up at a time when the housing cycle is entering a period of decline.

For further information:

Jane Robinson, Brian Howe's Office, (06) 277 7680