Australia's home-building approvals unexpectedly surged in November by the most in nine months as higher employment, wages and immigration encouraged investment.The number of approvals to build or renovate houses and apartments rose 8.9 percent from October (when they slipped 3.6 percent), according to the Australian Bureau of Statistics.
WHAT THIS MEANS
An acceleration in construction increases pressure on the central bank to raise borrowing costs to stem inflation, already above its 3 percent ceiling. This report also suggests investors may be switching into property amid stock market volatility that is seeing Australia's benchmark index falling.
This will ultimately ensure that interest rate rises continue to creep up this year, so long as such trends remain, comments Michael Marquette of Marquette Turner. He continues that "for those investors concerned about the Australian stock market, the residential housing market looks like a good place to be''.
Approvals to build private houses rose 0.3 percent to 9,340 in November, today's report showed. Approvals for apartments and renovations advanced 28.4 percent to 4,882.
Another report today showed Australia's construction industry accelerated in December, boosted by new infrastructure projects and commercial property building.
Another report today showed Australia's construction industry accelerated in December, boosted by new infrastructure projects and commercial property building.
The construction index rose 6 points to 59.2, according to a report by the Australian Industry Group and Housing Industry Association released in Sydney. A reading above 50 indicates the building industry is expanding.
It is also the view of Marquette Turner that rental vacancy rates, which are averaging 1.7 percent, are unlikely to improve significantly during 2008.
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