The number of private sector houses being approved has risen for the tenth consecutive month, according to the latest ABS Building Approvals figures, however the total number of dwelling approvals slipped.

In seasonally adjusted terms the number of private sector houses approved rose 5.0% in October 2009, while the total number of dwellings approved fell 0.6% – mainly driven by a large fall in other residential dwellings (-17.9%). New South Wales (-10.3%) and South Australia (-4.4%) recorded the largest falls in the total number of dwellings approved.

The value of total building approved fell 7.2% in October. Falls occurred in non-residential building (-14.4%) and residential building (-0.2%) . The value of alteration and additions to residential property rose 0.3% to $537.9m, again proving the RBA’s point that housing investment is not waning but merely being more commonly redirected toward upgrades rather than new homes.

The Chief Economist at the Housing Industry Assocaition, Dr Harley Dale, said that building approval levels currently implied around 145,000 housing starts per year, well short of the new homes required to meet Australia’s rapidly growing population.

“It is encouraging to see signs of a new home building recovery, but then after five years of trend decline in residential construction you would certainly hope to be seeing some evidence of a turnaround,” he stated. “We are, however, looking at a moderate rather than strong lift in new home building in 2010. This disappointing outlook will remain in play until such time as credit constraints on medium and high density developments are eased and until supply side obstacles including inequitable taxation of new housing and re-emerging land supply shortages are effectively tackled.”

“In the meantime an acute shortage of new housing stock will persist, generating undue pressure on rents and on existing home values.”

The number of seasonally adjusted residential dwelling approvals increased in October by 10.5 per cent in Tasmania, 9.7 per cent in Western Australia, and 4.2 per cent in Queensland. Approvals dropped by 10.2 per cent in New South Wales and were down by 4.5 per cent in South Australia and 0.3 per cent in Victoria.