Australian home-building approvals soared in May on apartment projects, a sign housing demand may accelerate after the central bank cut interest rates. The local currency advanced.
The number of permits granted to build or renovate houses and apartments gained by a record 27.3 percent from April, when they fell a revised 7.6 percent, the Bureau of Statistics said in Sydney today. The result was more than five times greater than the median forecast for a 5 percent gain in a Bloomberg News survey of 19 economists.
Reserve Bank of Australia Governor Glenn Stevens will keep borrowing costs unchanged today, economists predict after he lowered rates by 50 basis points in May and another quarter point to 3.5 percent last month to help insulate the economy from a global slowdown. Today’s report showed the surge in approvals for apartments was driven by projects in New South Wales, Victoria and the Australian Capital Territory.
“Apartment approvals have traditionally been very volatile; hence, whilst the gain in May is encouraging, it is worth watching in future months,” said Celeste Tay, a Singapore-based economist at 4cast Ltd. The gain in private-house approvals may be a case of “catch up” following earlier weakness because of changes in building procedures in Western Australia state, she said.
Building approvals advanced 9.3 percent in May from a year earlier, the report showed. That compares with economists’ forecast for a 15.2 percent drop year-over-year.
Approvals to build private houses rose 8.7 percent to 7,256 in May from the previous month, the report showed. Approvals for apartments and renovations advanced 58.7 percent to 6,197.
The local dollar traded at $1.0269 at 12:19 p.m. in Sydney, compared with $1.0254 before the data. Traders are pricing in no change in rates at the RBA’s policy meeting today, swaps data compiled by Bloomberg show.