SYDNEY (REUTERS) - Australian approvals to build new homes surged to a record high in November as high rise living becomes ever more fashionable and affordable, a trend that promises to underpin economic growth for some time to come.
Thursday's figures from the Australian Bureau of Statistics showed approvals jumped 7.5 per cent in November to confound forecasts of a 3.5 per cent fall. The gain was all the more significant as it followed an 11.5 per cent increase in October.
"These are fabulous numbers," said Mr Michael Workman, a senior economist at Commonwealth Bank. "2014 was already looking like a record for homes built, but 2015 could now be even better."
The rush was led by the multi-unit sector, and especially apartment towers, where approvals leaped 16.7 per cent in November to the highest since the data began in 1983.
In all, some 18,245 homes won approval at a value of A$5.5 billion, again both all time highs.
The resurgence was particularly welcome as some of the life had seemed to come out of home building in the middle of last year, just as the activity was most needed to offset the drag from a cooling mining boom.
That will be a comfort to the Reserve Bank of Australia (RBA) which has been counting on residential construction to create jobs as work on mega mining projects winds down.
Housing has big multiplier effects on economic growth through all the many trades and materials needed.
It will be sorely needed as growth slowed to 2.7 per cent in the year to September, and short of the 3 to 3.25 per cent pace Australia has come to consider "normal".
Markets were impressed enough to push the Aussie dollar up a quarter of a U.S. cent to US$0.8095, and to lengthen the odds of another interest rate cut.
The wrinkle in this boom is that so much of the work is on towers rather than the detached houses once so beloved by Australians. With most of the 23.5 million population crowded into a few costal conurbations, it is simply too expensive to buy land for houses in the inner cities where the jobs are.
Yet towers take much longer to start and complete than houses, so the near term boost to the economy might not be as great as in the past, but it will last a lot longer.
"We estimate this housing cycle could add maybe 2 to 3 percentage points to economic growth spread over three to four years," said Mr Workman. "That's just what the doctor ordered for an economy weaning itself off mining."