Matthew Hassan – Chief Economist at Westpac Banking Corporation – offered his take on Monday's disappointing Aussie housing market data, wherein building approvals recorded a drop of 8.1% in October as compared to the previous month's downwardly revised gain of 7.2%.
“Overall the Oct dwelling approvals report highlights the weak outlook for new dwelling construction. High rise segments look susceptible to further declines and non high rise is still softening despite rate cuts and the improved tone to markets since mid-year. Falling dwelling investment is set to be a continued drag through 2020 – we expect new dwelling investment to be down 11.5% for the full calendar year 2019 and is forecast to fall a further 8% in 2020. The weakness stands in stark contrast to the rebound coming through in prices but reflects the long lags on high rise projects and the specific issues facing this particular segment that are likely to preclude a rebound in high rise activity. Price gains are also expected to moderate as we head into 2020 as supply starts to lift and as affordability strains re-emerge. See our latest Westpac Housing Pulse report for a more detailed run down on the situation and outlook.”
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