Perth home building remains solid despite drop in approval rates

Although the latest Australian Bureau of Statistics data reports a fall in Perth home building approvals over June, underlying activity levels remain solid.

The number of houses approved for construction over June fell by 159, a decrease of 9.7 per cent.

House approvals for the first six months of this year also dropped compared to the same period a year ago, down 778, or 7.9 per cent, to 9005.

Approvals for units also fell over June following a strong result in May.

A total of 541 units were given the green light compared to the 1107 approved over the previous month – the highest monthly total ever recorded in the ABS series for Perth.

However, unit approvals are up by a hefty 27 per cent in the first half of the year compared to the same period last year, seeing an increase of 832.

The sharp rise in unit approvals has lifted overall home building approvals marginally, with 12,293 recorded so far this year compared to 12,869 in the first six months of 2014.

Although house building activity has moderated over the past year, Perth still trails only Melbourne as the leading builder of houses out of all the capitals.   

Increased building activity can be expected to generate increased local economic activity, although recent job market data remains subdued.

The ABS reports that the seasonally adjusted unemployment rate for Western Australia over July increased sharply from 5.9 per cent to 6.4 per cent – the highest monthly total since May 2002.

Jobs growth data however was more encouraging, with the number of employed up by more than 27,000 over July compared to July last year.

The ABS also revealed a jump in the national unemployment rate over to 6.3 per cent, the equal highest rate since 2002, indicating the economy may need more stimulus.

Dr Andrew Wilson is Domain Group’s Senior Economist. Tweet him at @DocAndrewWilson