The number of dwellings approved rose 5.9% in November 2009 following a fall the month prior, the ABS advised today, with the news greeted by economists as a positive sign for the coming year.

There was a fall in the number of houses approved (-2.0%), however this was offset by a rise in approvals for dwellings other than houses (+31.7%), with the overall 5.9% upward movement double the forecasts of economists. The greatest improvement to the number of dwelling approvals was seen in New South Wales (+6.0%), Victoria (+10.2%), and Queensland (+12.4%).

Analysts believe that, with supply tight, the property sector is in for another strong year, albeit unlikely to match the rapid growth of last year. Interest rates are seen as the major dampener, with the prospect of another rate hike from the RBA rising on the back of this data and recent house price figures.

The RBA has raised the official cash rate by one quarter of a percent at their past three meetings (October, November, December) – taking the rate from 3 per cent to 3.75 per cent. They do not meet in January, with the next meeting to take place on February 2 when inflation data (due in late-Jan) will be in the forefront of their minds along with other key housing industry statistics and retail sales.