New Housing starts fall and push up house costs

The number of new dwellings built in Australia fell at the end of last year, which would work to keep housing unaffordable, analysts say.
Dwelling commencements in the December quarter fell 0.8 per cent to 37,413 units, seasonally adjusted, from a downwardly revised 37,726 units in the September quarter, the Australian Bureau of Statistics said today. The median market estimate was for a fall of 3 per cent in the December quarter.
In the year to December 2006, total dwelling commencements rose 5.5 per cent, seasonally adjusted.
Housing Industry Association executive director of housing and economics Simon Tennent said the decline in dwelling commencements was not surprising.
"The industry is continuing to face all sorts of pressures from high land costs and a lack of interest from the market in general," he said.
"Approvals are taking longer and longer to get to commencement stage."
The housing industry would not recover until late in 2007 or early next year, Mr Tennent said.
He said the industry needed to build 40,000 homes in the quarter to cater for population growth.
"It continues to show the industry is building less," Mr Tennent said.
"The pressure on housing affordability and the rental market is not going to go away until we build 40,000 homes per quarter."
UBS chief economist Scott Haslem said the numbers suggested a recovery in the housing sector was still some way off.
"It's out there we just don't know when," Mr Haslem said.
"The figures are consistent with the weak building approvals we've seen. They paint a picture of a housing sector that's stuck in the mire."
Source: AAP