Housing drives Australian growth as consumer confidence rises
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Version 0 of 1. Consumers and businesses both believe the Australian economy is on the up as the housing market looks set to take the mantle of the mining industry by driving growth. The latest weekly ANZ-Roy Morgan survey shows consumer confidence levels have completely recovered from the sharp drop that began in April in the buildup to cuts outlined in the federal budget. A separate survey by Dun and Bradstreet showed that business confidence was improving, with the number of new enterprises jumping 23% in the June quarter compared with the previous three months. ANZ chief economist Warren Hogan said consumer confidence levels – which have risen 2.4% in the past week – were now back in line with business confidence. "Consumer confidence is now back to pre-budget levels and consistent with moderate growth in consumption and economic activity," he said in a statement on Tuesday. "The good news is that the headline impact of the budget appears to be temporary and the more enduring features of the economy, such as rising share and house prices, job creation and a stable world economy are now driving consumer attitudes to spending and finances." Hogan said that now consumers were feeling more confident, retail sales should pick up. The housing market is continuing to strengthen, and looks set to take over from mining investment as the main driver for economic growth in the coming year. New home sales rose 1.2% in June, seasonally adjusted, and were up 2% in the June quarter, the Housing Industry Association (HIA) said on Tuesday. CommSec economist Savanth Sebastian said economic growth was shifting from the mining boom states of Western Australia and Queensland to states where home construction is the strongest, such as New South Wales. "It is very likely that home building and home renovations will be the linchpin of the Australian economy growth story over the coming year," he said. "While there are signs of a consolidation in housing activity, new home sales are up almost 14% on a year ago." ANZ expects consumer spending to remain moderate in 2014, with improvements to flow through into 2015. HIA chief economist Harley Dale said new home sales were strong across Australia with four out of the five mainland states recording increases. "The new home building sector will provide a healthy contribution to broader economic growth in 2014/15," he said. However, Dale said a lack of land on which to build apartment blocks could dampen growth in new home sales in the coming months. "As the recovery enters its third year, the magnitude and duration of the current new home building upcycle is less certain," he said. "The share of medium- to high-density construction is higher and there are considerable delays occurring in the availability of titled land for detached and semi-detached housing." Sales of flats, townhouses and semi-detached houses were up 15.9% in June while sales of new detached houses fell 1%. |