Approvals of all dwellings in the monthly building approvals figures released by the Australian Bureau of Statistics were up by 3.3% during May. However, the result was a full 11.7% lower than in May 2005. The MBA believes that the effect of the May interest rate rise, rather than taking hold immediately, will become apparent in around six months time. "These things do take time. We have already had an immediate impact in terms of enquiry levels," said MBA chief economist Peter Jones. While building approvals for houses grew only marginally during May, approvals for "other dwellings" which includes apartments and townhouses, shot up by 10% - although approvals in this category have pared back a full 25.6% since this time last year. The MBA estimates that with prices of building materials continuing to spiral upwards, this month's positive result is unlikely to be sustained, and the trend for the next six to twelve months is likely to be downward. "The approval figures for apartments are way down on a year ago. Building costs are still rising and there is very little capital growth in apartments around the country, besides Perth. For investors, the logic has disappeared from the market and will probably stay down for the next six months," said Jones. On a state-by-state basis, seasonally adjusted approvals fell by 34% in South Australia and 8.4% in Western Australia. Conversely, rises were recorded in Victoria, up 21.5%, Queensland, which improved by 8.5% and New South Wales, up 6.1%.

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