Construction Approvals in Australia Come in Weaker than Expected

Forex - In Australia, building approvals fell short of expectations in November, weakening hopes for a recovery in housing supply to accommodate increasing migration.

According to data released by the Australian Bureau of Statistics (ABS), the total number of housing approvals in November declined by 3.6% to 14,998, following a 5.2% increase in October. Economists had expected approvals to decrease by 0.9% over the month.

Housing supply is a major issue for the Australian economy; rising migration ahead of the federal elections anticipated in mid-May is causing housing prices to remain high despite high interest rates.

Although the Reserve Bank of Australia (RBA) has kept interest rates high for years to alleviate excessive inflationary pressures on the economy, housing prices have only started to decline in recent months.

Rising rents have also contributed to the increase in the cost of living.

The Australian Labor Party government has promised to significantly increase housing supply in the coming years to alleviate the housing shortage issue and to mitigate some of the upward pressure on prices that has made homes unaffordable for new entrants into the market.

The ABS noted that the decline in housing approvals in November was observed across all housing types. Data showed that approvals for private sector dwellings decreased by 1.7%, while approvals for private dwellings excluding houses fell by 10.8%.