Lower housing approvals add to supply woes

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National housing approvals dropped by 3.3% in February extending the fall recorded in the previous month, according the latest data from the Australian Bureau of Statistics.

South Australia fell by 23.3% - the biggest drop in the number of dwellings approved during February. NSW recorded a 14.6% drop, while Victoria fell by 1.9%. The total value of building approved also lost ground in February, falling by 4.5% dragged down by a massive 13% drop in non residential building approvals.

"The result indicates that the units and semi-detached market is still bearing the brunt of tight credit conditions," said Ben Phillips, senior economist with the Housing Industry Association. "Interest rate increases over 2010 will only exacerbate this situation. Tight credit conditions in the detached housing market are still being masked by the latent impacts of the first home buyers boost, social housing boost and low interest rates through 2009. "

The number of seasonally adjusted residential dwelling approvals increased in February by 2.1% in Queensland, 8.1% in WA, and 17.6% in Tasmania.

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