Outlook 'remains fragile' for Aussie house builders

There was a 7.8 per cent rise in the number of housing developments being approved in September, but members of Master Builders Australia still believe the short-term outlook for residential builders "remains fragile".

Aussies in some parts of the country only have a very limited number of properties to choose from, as construction activity has been somewhat subdued in recent years.

The latest upturn was primarily down to a 17.9 per cent seasonally-adjusted rise in the number of apartments being erected, while house approvals only grew by a modest 1.2 per cent – a very disappointing figure.

Chief executive of the building group Wilhelm Harnisch believes the overall 7.8 per cent improvement does not accurately reflect the state of the housing sector.

"Builders continue to report that activity is low and that the outlook remains poor in the short term," he remarked.

"While there are welcome increases in New South Wales, Queensland and Victoria, overall the housing picture is one of a sluggish recovery, despite the cumulative cuts in interest rates."

Mr Harnisch added that house hunters are lacking confidence in the market at the moment and this is "holding back" the house building industry.

Although there has been a marked upturn in the number of Aussies securing mortgages in recent months, there is still a long way to go before the peaks of 2007-08 are reached.

People have been searching for the best home loans more frequently since the Reserve Bank of Australia (RBA) trimmed interest rates by another 25 points last month, but Master Builders Australia insisted that another 0.5 per cent reduction is needed to stimulate further activity.

The Housing Industry Association has also been banging the drum for more rate cuts and the organisation said it is too early to call whether the recent amendments and other government measures will kickstart new home building.

Members of the RBA's board will meet again next week and house hunters will be keeping their fingers crossed that more rate reductions will be sanctioned.

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