Building approvals

The building approvals data remains particularly poor, in our view. By number, it is plumbing multi-decade lows, at a time when we are desperate for housing, and by value bounces around erratically enough to rob us of firm conclusions, but, that said, still looks to have rolled firmly enough.

I think of housing as a “rational bubble” at this stage. If there is only one loaf of bread on the island, you’ll bid it up to the moon to eat it, that’s rational to do.

It can still all end in tears if the unemployment rate turns, and the intersection of the long-run aggregate supply curve and the downward sloping aggregate demand curve shifts lower even if only by a little bit.

So, whilst there’s an undersupply, and we need to build more, it seems we can’t build more, at present, and, the weight of rates depressing investment makes it all the more curious, in our view, that CSR and ABC and BLD are being taken over.

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