New home approvals rise 5.9% in Australia

Approvals to build new homes in Australia jumped a surprisingly strong 5.9 per cent in November, further evidence of a construction boom that will increasingly foster growth.

Approvals for apartment blocks, a typically volatile sector that suffered during the crisis when funding dried up, led the way in November with a whopping 32 per cent jump.

That lifted total building approvals by a third from November last year, the biggest rise in nearly eight years.

"Construction activity will be very buoyant in 2010, ensuring solid activity levels for firms in building material, construction and engineering sectors," said Craig James, an economist at the Commonwealth Bank.

Activity in non-residential approvals was equally impressive, with the value of work up 53 per cent during the month thanks largely to generous government stimulus spending on schools.

The overall strong report eclipsed a 1.9 per cent dip in approvals for new private houses, marking a pause after an 11-month rally.

Analysts at Commonwealth Bank say the construction boom could last two to three years and add 2-3 percentage points to economic growth.

This is without accounting for sizeable additional expenditure incurred by house buyers furnishing their new homes.

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