- NAB
Australia's housing construction boom has reached the peak, despite a rebound in monthly approvals. The total number of building consents issued in Australia in September rose a seasonally adjusted 2.2% on month, according to the Australian Bureau of Statistics. This exceeded market expectations for a 1.0% increase following the downwardly revised 9.5% plunge in August. New approvals were driven by private sector dwellings excluding houses, such as apartments, which surged a seasonally-adjusted 6.1% in September, while private sector houses declined 1.9% over the month. Measured on an annual basis, the gauge advanced a record 21.4% after the 5.1% rise in the preceding month. Despite the growth in September, economists noted that housing construction was likely to be less of catalyst of economic growth going into 2016.
Low borrowing costs have been the main prerequisite for Australia's building boom in recent years. Moreover, it is widely expected that the Reserve Bank of Australia will cut the official cash rate even further, possibly as soon as tomorrow. Last month the central bank warned that the high rise construction boom, primarily driven by increased investor activity and foreign buyers, "could lead to an excessive increase in construction activity and future supply overhang".
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