Australia’s home building approvals saw its first rise in four months, albeit still below economist forecasts.

The figure rose 1 per cent to 12,227 units in July, seasonally adjusted, the Australian Bureau of Statistics (ABS) said on Tuesday. Economists had forecast a 2 per cent rise.

An uptick in dwelling approvals in July, although welcome, comes after three consecutive falls and sentiment needs to turn around if the tenuous outlook for residential building is to improve, according to Master Builders Australia, the peak body for the building and construction industry.

Mr Peter Jones, Chief Economist, said “The positive result for July masks ongoing private sector weakness and sentiment will be difficult to turn around given recent volatility in the world economy and associated turbulence on equity markets that has acted to dampen consumer confidence.”

He said, “The latest figures reflect the final stages of social housing stimulus spending and the much needed upswing in residential building activity appears set to remain on hold until improved sentiment and less cautious householder behaviour work to underpin a recovery.”

“The interest rate-sensitive residential building industry is relying on an extended pause in Reserve Bank monetary policy to shore up consumer confidence and encourage an upswing.”

“Builders have become pessimistic as residential and commercial building-related stimulus spending programs wind down at the same time as the credit squeeze and other regulatory constraints continue to affect activity.”

Mr Jones said, “Government action is needed to remove impediments that suppress housing supply, force up prices and worsen housing affordability.”

“The Productivity Commission, Housing Supply Council, Henry Tax Review and the Reserve Bank have all stated that unless there is urgent reform to address bottlenecks the strong supply response needed to meet Australia’s housing shortage will not eventuate.”