Australia’s property investors appear to be shying away from the housing sector, as less money is being placed into new apartments.
In WA alone, building approvals have dropped more than 13% in June – the lowest since 2013. Apartment and unit approvals fell sharply in the area, as private home approvals went down 4.7% after a near 9% drop in May, reports The West Australian.
Nationally, the housing sector’s approvals dipped 8.2% with that linked solely to a 20% fall in units and apartments.
The housing sector is considered to be the strongest part of the country’s economy.
A drop in interest rates was announced by the Reserve Bank of Australia earlier this year to help housing fill the economic void from the mining construction slowdown. However, the rates also have prompted fears that the market may be on its way to inflation, particularly fuelled by Sydney and Melbourne.
The latest figures reveal unit and apartment approvals, despite the June fall, are still almost 16% higher than a year ago.
“The Reserve Bank is comfortably on the interest rate sidelines and we do not expect a move in rates for the rest of 2015,” CommSec senior economist Savanth Sebastian was quoted as saying.
“However, the risks certainly lie with another rate cut rather than a hike.”
Meanwhile, JP Morgan economist Stephen Walters said the continuing fall in export prices should be the catalyst for serious economic reform.
“The extended decline in the terms of trade highlights the importance of policymakers and firms embarking on another wave of productivity enhancing reforms to restore growth in national income, particularly if our speed limit on growth is lower, as we now assume,” he said.