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Australia housing construction boom shows signs of slowing down
[SYDNEY] Australia is witnessing a cooling off in its biggest-ever home-building boom as approvals for new projects sank 17.2 per cent in April, a turnaround that could undermine policymakers' hopes for solid economic growth over the next two years.
Building approvals have been on a decline since last August, with the once-booming apartment sector the biggest hit, data from the Australian Bureau of Statistics shows.
Data published on Tuesday shows a better-than-expected gain of 4.4 per cent in April, but it follows a hefty loss of 10.3 in March.
Multi-unit approvals rose 9.6 per cent in April from March when they slumped more than 18 per cent. Approvals are still down an annual 26.5 per cent.
Analysts say the data indicates Australia's biggest-ever construction boom is slowly unwinding.
"While the monthly update was more positive than expected the slowdown theme remains clear," said Matthew Hassan, senior economist at Westpac Banking Corp.
"New dwelling investment is expected to enter a decline from late this year, becoming a material drag on growth." The Reserve Bank of Australia (RBA) has been counting on continued strength in home building to offset a lingering drag from the end of a mining investment boom.
Earlier this month, the RBA even upgraded its forecast for gross domestic product (GDP) growth by 25 basis points for mid-2018 to 2.75-3.75 per cent.
Growth in the A$1.7 trillion ($S1.74 trillion) economy is expected to accelerate to between 2.75 per cent and 3.75 by June 2019.
But economists are not so optimistic.
"It is hard to see that kind of growth," said Michael Turner, strategist at RBC Capital Markets.
"We are a bit more circumspect. Consumer spending is still a bit more conservative and construction is slowing down. We're seeing GDP of below 3 per cent over the next two years."