Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Approvals to build private homes struck a record high in February, fuelled by the federal government’s HomeBuilder grants program which is due to end on Wednesday.
The Australian Bureau of Statistics said since the introduction of HomeBuilder in June 2020, private house approvals have risen by almost 70 per cent.
In February, home approvals jumped by 15.1 per cent to 13,939 houses, breaching the previous peak set in December last year.
“HomeBuilder has driven strong demand for new homes across the country,” Housing Industry Association chief economist Tim Reardon said.
“The record volume of work will see home building absorb workers from across the economy in 2021 and into 2022.”
The HomeBuilder scheme was introduced during the depths of the COVID-19 pandemic and late last year was extended to March, although the size of grants were trimmed from $25,000 to $15,000.
While it is now wrapping up, applications can still be submitted until April 14 and work has to start within six months of signing a new contract.
Such strength in home building adds to the current buoyancy in the market, which has seen the biggest rise in house prices since 2009 and demand for mortgages at a record high with interest rates at record lows.
Financial regulators are keeping a watchful eye on developments in the housing market, although say there is no cause for alarm at this stage.
The Reserve Bank’s monthly credit data, also released on Wednesday, showed a steady climb in owner-occupier loans.
In February, owner-occupier loans grew by 0.6 per cent to an annual rise of 5.9 per cent, the highest level since January 2019.
However, investor loans were up only up 0.1 per cent to a meagre 0.2 per cent on the year.
“This probably also makes APRA and the RBA more comfortable with current macroprudential policy settings as owner-occupied lending tends to be less risky than investor lending,” AMP Capital senior economist Diana Mousina said.
While the housing sector is flying, the airport industry has been ground by the pandemic.
Analysis by the Australian Competition and Consumer Commission found revenue among the nation’s four largest airports has dropped between 15.5 and 21.6 per cent as passenger number tumbled 26.5 per cent.
The commission’s chair Rod Sims says the pandemic has devastated the aviation sector and airports, but warns the watchdog will be closely monitoring the industry in its recovery phase.
“Given the airports’ existing market power, it will be critical that legitimate attempts to return to a sustainable financial position do not stray into anti-competitive behaviour, or result in unreasonable price increases.”
A separate analysis on the pandemic’s impact predicts at least 5000 businesses are likely set for closure in the next three months.
This follows the end of the JobKeeper wage subsidy and rules around trading while insolvent returning to normal, measures that kept alive thousands of firms that would have otherwise folded.
Credit reporting agency CreditorWatch chief executive Patrick Coghlan is not expecting the tsunami of insolvencies that was talked about last year, but argues companies need to be allowed to fail.
“It means companies that shouldn’t be operating aren’t pulling down the rest of the economy,” Mr Coghlan said.
“We need to get back to at least pre-COVID administration levels and away from the synthetic environment we’ve lived in for the past 12 months.”