Australia: Upturn in apartments provides optimism for 2020 – ANZ

The Australia and New Zealand Banking Group (ANZ) analysts offer their quick reaction to the Australia Building Permits data released earlier this Monday.

Key Quotes:

“Building approvals were flat in December after a surge in November. The flat result was above market expectations (and slightly below our forecast) and is a positive sign for 2020 building activity. Unit approvals in Vic more than doubled after a similar surge in NSW during November. Other leading indicators of residential construction are also pointing to a lift in building activity during 2020.

An upturn in approvals is unlikely to ease housing supply shortages and price growth in the short term (due to substantial lags between approval and completion of large apartment developments). However, the recent surge in housing prices has not brought housing credit out of its subdued growth, as mortgagees take advantage of low rates by paying down debt. This means that the RBA has more scope for further rate cuts and stimulatory monetary policy.”