Source: The West, 3 September 2013
Fifty-year low interest rates have finally proved enticing enough for West Australians to build new homes but the business community is struggling to turn a profit.
Ahead of today’s Reserve Bank board meeting, where rates are expected to be left on hold, figures from the bureau of statistics confirmed the housing sector has got its mojo back.
Housing approvals across the State hit 2100 through July, the best month since May 2006 when official interest rates were at 6.25 per cent.
Total approvals, including for units and apartments, grew almost 10 per cent through the month to be more than 55 per cent higher than a year ago.
Nationally, total approvals improved 10.8 per cent. All occurred before the Reserve Bank cut rates another quarter of a percentage point last month.
The impact of lower rates is also showing up in house prices.
RP Data-Rismark’s measure of house values improved 0.5 per cent nationally through last month to be 4 per cent higher over the past three months.
It was the best quarterly performance in four years.
Perth prices edged down 0.2 per cent, but total values are 9.4 per cent higher in the metropolitan area over the past 12 months.
Across the nation, the total number of homes on the market is about 15 per cent lower than this time last year, suggesting a solid base going forward.
“The general trend of improvement in residential construction is proof positive that the RBA’s rate cuts are slowly fostering expansion in parts of the housing industry,” Housing Industry Association chief economist Shane Garrett said.
“We look forward to further movement on rates in the coming months.”
While the housing sector may be recovering, overall corporate profits are struggling. Profits fell 0.8 per cent in the June quarter to be 5.4 per cent lower through the 2012-13 financial year.
It was the biggest fall in corporate bottom lines in 17 years.
Through the quarter, inventories improved slightly while sales fell across six of 15 sectors measured by the bureau of statistics.
Not helping the corporate sector is the state of petrol prices, which jumped 4.1¢ a litre nationally over the past week, blamed on unrest in Syria.