A stronger than expected rise in building approvals could be the foundation of a housing sector recovery, economists say.
Signs are emerging that the effect of last year's three interest rate rises is starting to fade.
The more stable private sector housing component posted strong gains, while building construction activity is starting to pick up.
Australian building approvals rose 8.1 per cent to 12,858 units in April, seasonally adjusted, from an upwardly revised 11,898 units in March, the Australian Bureau of Statistics (ABS) said today.
Economists had expected approvals to rise by 2.5 per cent in April.
In the year to April, building approvals went up by 4.5 per cent.
Reactions
Grange Securities chief economist Stephen Roberts said the housing sector would continue to grow strongly in the second quarter of 2007.
"All told, the April home building approvals figures are consistent with signs of recovery in housing activity and add to the run of economic readings that point to accelerating economic growth continuing into the early part of the second quarter," he said.
Most of the rise in building approvals during April came from a 19 per cent jump, seasonally adjusted, in the "other sector" for private sector dwellings, which includes volatile apartment projects.
Rental shortage
The more stable private sector houses tally rose by a seasonally adjusted 3.3 per cent to 8734 new dwellings, which HSBC chief economist John Edwards said was an indication of a recovery in the housing sector.
"Sharp increases in rents, low vacancy rates and recent anecdotal reports of increased house prices would be consistent with this," Dr Edwards said.
Nonetheless, most of the increase in new building approvals was in Queensland, which experienced a 31.6 per cent seasonally-adjusted rise in total new dwellings and a 24.9 per cent gain in private sector houses.
QLD leading the way
"The approvals gains were almost entirely in Queensland, however, with New South Wales and Victoria seeing further decline.
"If there is indeed recovery, it is still very patchy."
Commonwealth Bank of Australia senior economist Michael Workman said it was difficult to be negative about the housing construction outlook.
Forecast
"The strong underlying fundamentals of firm jobs, population and income growth, and low vacancy rates are expected to drive the gradual rise in national dwelling construction over 2007 and 2008," he said.
Mr Workman said construction companies still had healthy order books, with activity likely to flow at high levels into next year for the non-residential sector.
But JPMorgan economist Helen Kevans said the Reserve Bank of Australia's (RBA) decision to raise rates last year was still slowing residential construction activity.
"Indeed, the building approvals series is volatile, failing to indicate any clear trend emerging in the property market," she said.
"Still, the impact of the RBA's three quarter point rate hikes last year are likely still feeding through the residential construction sector, which continues to battle with rising material costs; this suggests there may be further correction in the sector to come."
Most economists expect interest rates to remain on hold for the rest of 2007.
Source: AAP
Tuesday, June 05, 2007
Sunday, May 27, 2007
Banks fee grab slows due to competition as it hits $10bn
Australia's banks milked $9.8 billion in fees in the 2005-06 year from account holders, with households accounting for $4 billion with many more Australians paying penalty fees on credit cards.
Total domestic fee income earned by banks grew by 6 per cent in 2006, to a whopping $9.8 billion.
While businesses paid $5.7 billion in fees, banks’ fee income from households jumped 10 per cent to $4.0 billion in 2006.
“The growth in fee income appears to have been mainly the result of an increase in the use of banking services rather than higher unit charges,” the RBA said today.
Credit card fees jumpTotal fees paid by households on credit cards jumped 13 per cent in 2006 to $1.02 billion.
Account-servicing and transaction fees on credit cards increased by 9 per cent, which was roughly in line with the growth in the number of credit card accounts and the value of cash advances.
Other credit card fees – which are mainly penalty fees, over-limit fees and foreign currency conversion fees – rose by 21 per cent.
Strong home loan competition
Fee income from housing loans grew by 6 per cent to $800 million, slower than the growth in the number of housing loan approvals.
“This development reflects strong competition among banks for new housing lending in recent years, which has seen banks discounting or waiving loan establishment fees,” the RBA said.
Fee income from personal loans rose by 15 per cent to $500 million, consistent with the strong growth of personal credit in 2006.
The largest component of banks’ fee income from households was fees on deposit accounts, accounting for more than 40 per cent of the total at $1.62 billion.
"Fee income from this segment grew by 9 per cent in 2006, mainly reflecting the growth in the number of accounts and transactions," the RBA said.
The latest survey by the Reserve Bank of Australia (RBA), relating to banks’ 2006 financial year, covered 18 banks which accounted for more than 90 per cent of the total assets of the banking sector in Australia.
A banker's viewThe Australian Bankers Association said today rising transaction numbers was driving bank fee growth.
It own analysis shows that actual unit costs - that is, the cost of each transaction to consumers - was declining.
ABA chief executive David Bel said the RBA figures told a "double good story'' for consumers.
The results showed fees were coming down and interest margins - the difference between the interest rates on bank loans and deposits - were also being squeezed.
In a report commissioned by the ABA, Macquarie University academic Kim Hawtrey found the average unit cost of banking to consumers fell in 2006 and over the past five years had dropped by 5 per cent.
Source: AAP
Total domestic fee income earned by banks grew by 6 per cent in 2006, to a whopping $9.8 billion.
While businesses paid $5.7 billion in fees, banks’ fee income from households jumped 10 per cent to $4.0 billion in 2006.
“The growth in fee income appears to have been mainly the result of an increase in the use of banking services rather than higher unit charges,” the RBA said today.
Credit card fees jumpTotal fees paid by households on credit cards jumped 13 per cent in 2006 to $1.02 billion.
Account-servicing and transaction fees on credit cards increased by 9 per cent, which was roughly in line with the growth in the number of credit card accounts and the value of cash advances.
Other credit card fees – which are mainly penalty fees, over-limit fees and foreign currency conversion fees – rose by 21 per cent.
Strong home loan competition
Fee income from housing loans grew by 6 per cent to $800 million, slower than the growth in the number of housing loan approvals.
“This development reflects strong competition among banks for new housing lending in recent years, which has seen banks discounting or waiving loan establishment fees,” the RBA said.
Fee income from personal loans rose by 15 per cent to $500 million, consistent with the strong growth of personal credit in 2006.
The largest component of banks’ fee income from households was fees on deposit accounts, accounting for more than 40 per cent of the total at $1.62 billion.
"Fee income from this segment grew by 9 per cent in 2006, mainly reflecting the growth in the number of accounts and transactions," the RBA said.
The latest survey by the Reserve Bank of Australia (RBA), relating to banks’ 2006 financial year, covered 18 banks which accounted for more than 90 per cent of the total assets of the banking sector in Australia.
A banker's viewThe Australian Bankers Association said today rising transaction numbers was driving bank fee growth.
It own analysis shows that actual unit costs - that is, the cost of each transaction to consumers - was declining.
ABA chief executive David Bel said the RBA figures told a "double good story'' for consumers.
The results showed fees were coming down and interest margins - the difference between the interest rates on bank loans and deposits - were also being squeezed.
In a report commissioned by the ABA, Macquarie University academic Kim Hawtrey found the average unit cost of banking to consumers fell in 2006 and over the past five years had dropped by 5 per cent.
Source: AAP
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