Residential building approvals lifted in January, bouncing back as economists had predicted.

"This is offsetting some of the significant drop experienced in December 2018 as the impact of the credit squeeze continued to affect the housing market,” said Tim Reardon, HIA’s Chief Economist.

Approvals for homes rose 1.9 per cent and apartment approvals were up by 3.8 per cent, according to data from the Australian Bureau of Statistics (ABS).

Despite the modest bounce, building approvals still remain 28.4 per cent lower than in the same period last year. 

Mr Reardon told WILLIAMS MEDIA market confidence is falling away.

"As highlighted last week in HIA’s Quarterly Outlook, market confidence fell away in 2018 as dwelling prices corrected, adversely impacting all segments of the market. Investors and owner-occupiers are delaying purchase decisions and foreign investment has also fallen dramatically for numerous reasons," Mr Reardon said.

“An additional and unanticipated factor that emerged in 2018 was the credit squeeze created as banks reduced the amount of money they are prepared to lend each customer. The impact of the credit squeeze is expected to moderate over the first half of 2019, as the market adjusts to these new limits. 

“Despite the small increase this month, the pipeline of building work is now being reduced as the number of approvals slowed through the course of 2018."

Master Builders CEO Paul Bidwell says they will continue to work with the government to increase demand for construction.

“Looking ahead we’ll continue to work with state government to increase demand for new construction through initiatives like our call to Bring Back the Boost to the Queensland First Home Owners’ Grant, addressing land supply and finance problems, and improving regulation around paying and getting paid.”

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