Australian home-building approvals rose in March at the fastest pace since 2002, a sign that housing demand hasn't been damped by the central bank's world- leading round of interest-rate increases.
The Reserve Bank of Australia boosted the benchmark lending rate yesterday for the sixth time in seven meetings, pushing borrowing costs to what Governor Glenn Stevens described as "average" levels. The moves are partly aimed at preventing a property bubble after housing prices surged 20 percent in the 12 months through March.
Today's report is "encouraging and a good leading indicator for employment, particularly for workers in the construction industry," said Michael Turner, an economist at 4Cast Ltd. in Sydney, whose prediction of a 6 percent gain in approvals was the closest of the analysts surveyed by Bloomberg.
Still, home-building approval figures are "highly volatile," Turner said. "You'd imagine there have been one or two large projects" approved in New South Wales and Victoria, Australia's most populous states.
The Australian dollar rose to 91.02 U.S. cents at 12:12 p.m. in Sydney from 90.89 cents just before the report was released. The two-year government bond yield was unchanged at 4.90 percent.
Approvals fell more than 8 percent in the first two months of this year after Prime Minister Kevin Rudd reduced grants on Jan. 1 to first-time buyers of new homes to A$7,000 ($6,370) from as much as A$21,000.
Home-loan approvals declined in February for a fifth straight month, dropping 1.8 percent to 50,287 from January, a report showed on April 12.
Mining Boom
Rising house prices, inflation and a forecast mining boom triggered by surging Chinese demand for Australian exports of iron ore and coal, were among reasons Governor Stevens increased the overnight cash rate target yesterday by a quarter point to 4.5 percent.
Policy makers have moved the benchmark rate by 1.5 percentage points from a half-century low of 3 percent in early October, adding about A$3,600 a year to repayments on an average A$300,000 mortgage.
Approvals to build private houses rose 0.5 percent to 9,779 in March from February. Approvals for apartments and renovations advanced 59.9 percent to 4,558.
Australia's services industry also expanded in April for the first time in five months, according to an index published today by Commonwealth Bank of Australia and the Australian Industry Group. The gauge gained 3.4 points to 52.3 from March.
