Peeling away the layers of this week's strong GDP result reveals a disappointingly soft picture for the Australian household sector. The 1.1%qtr gain lifted growth nationally to a robust 3.5%yr in Q1 but was dominated by a surge in resource exports with domestic demand still weak. The transition from mining to non-mining led growth is continuing but looking somewhat shakier as consumer spending remains restrained and a hit to confidence comes through.
Market analysis firm RP Data's monthly measure of prices, the RP Data-Rismark May Hedonic Home Value Index, fell by 1.9 per cent for the state and territory capitals in May. A fall of that size is typical of the pattern for May seen in the past couple of years. Annual growth remains strong, particularly in Sydney where prices in May were up by 16.6 per cent from a year earlier, and Melbourne with an annual gain of 9.9 per cent. At the other end of the scale, prices in austerity-affected Canberra were up by only 2.6 per cent, while Hobart prices were up only 1.4 per cent through the year.
Some good news in housing today with an upswing in housing construction underway, with approvals exceeding the peak of ten years earlier. New dwelling construction, after a broadly flat 2013, increased in Q1 by a reported 7.8% and renovation work was up 1.9%.
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