The construction industry is back in action as building approvals rise for the first time in three years, with units largely behind the increase.
Figures released by the Australian Bureau of Statistics for the month of July showed an 8.3% increase in total dwelling units, and a 4.9% rise in private sector houses.
"Overall, there has been an encouraging recovery in building approvals in 2006 to date," said Harley Dale, chief economist of the Housing Industry Association. "Although that recovery has been far more evident for the apartment market than for detached houses."
The HIA said that residential approvals are not yet at an optimum level. Concerns lie in what the impact of increased interest rates might have in sustaining further growth in the number of homes built.
Master Builders Australia found the new statistics encouraging, as the construction industry moves toward recovery. "Despite an inherent volatility, the recent pick up in other dwellings is encouraging," said Peter Jones, MBA's chief economist. "But the question still remains whether it will be enough to avert the looming rental crisis, particularly in Sydney."
With dwelling unit approvals making up a large part of the rise, MBA states the effect of previous interest rate rises could discourage investors. The difference will create a further gap in rental stock, and increase rents.