SYDNEY - Australian home-building approvals unexpectedly fell in October for the first time in five months after the Government reduced grants to first-time buyers and the central bank raised interest rates.
The number of permits granted to build or renovate houses and apartments dropped 0.6 per cent from September, when
they rose a revised 5.1 per cent, the Bureau of Statistics said yesterday.
The median estimate of 20 economists surveyed was for a 2 per cent gain.
Payments from the Government to first-time buyers of newly built dwellings fell in October to A$14,000 ($19,500) from A$21,000.
"We'll see some weakness in approvals over the next few months," said Helen Kevans, an economist at JPMorgan Chase. "Not only is the Reserve Bank tightening policy, but lending standards are tighter and that will weigh on approvals."
Building approvals rose 11.7 per cent in October from a year earlier. Economists tipped a 9.6 per cent gain.
House prices jumped 8.4 per cent in the six months up to September 30, according to a government report. Prices gained another 1.4 per cent in October, real-estate monitoring company RP Data-Rismark said yesterday.
Australians have a larger capacity to sustain higher house prices when compared with incomes than households in countries such as the US, central bank Deputy Governor Ric Battellino said last week.
"Australians seem to spend less of their income on non-housing consumption than is the case for US households, with a significant part of this difference explained by lower health costs," Battellino said. They "therefore have greater capacity to service housing loans".
Approvals to build private houses rose 5 per cent to 9642 in October. Approvals for apartments and renovations slipped 19.3 per cent to 2512.
- BLOOMBERG
