Territory Stories

Territory economic review

Details:

Title

Territory economic review

Creator

NT Treasury, Economic Analysis Division

Collection

Territory economic review; Department of Treasury and Finance newsletters; PublicationNT; E-Journals

Date

2001-09-01

Notes

Date:2001-09; Made available via the Publications (Legal Deposit) Act 2004 (NT).; This publication contains may contain links to external sites. These external sites may no longer be active.

Language

English

Subject

Northern Territory -- Economic conditions -- Periodicals

Publisher name

Northern Territory Government

Place of publication

Darwin

File type

application/pdf

Copyright owner

Northern Territorty Government

Parent handle

https://hdl.handle.net/10070/212444

Citation address

https://hdl.handle.net/10070/716386

Page content

SEPTEMBER 2001 10 TERRITORY ECONOMIC REVIEW www.nt.gov.au/ntt/economic Having been weak since mid-2000, Territory private sector building approvals rebounded strongly in the June quarter, more than doubling March quarter approvals to be at 311. Public sector approvals grew significantly as major developments, notably the Carey Street Defence units, received approval. Although in its early stages, the current upturn in private dwelling approvals, helped by the Territory and Commonwealth Government incentives, is an indication that the industry is gaining upward momentum. finance commitments pick up from low base Housing finance commitments for owner-occupiers (like approvals), is a key short term leading indicator for the residential construction sector. Seasonally adjusted monthly commitments rose 9.9 per cent in June, and quarterly approvals jumped 23.5 per cent, providing further support that the sector is showing signs of recovery. In original annual terms, owner-occupier commitments were positive for the first time since March 2000, when the impending introduction of the GST brought forward investment decisions. Year on year commitments remain weak, but appear to be at the bottom of the cycle. Government incentives helping The introduction of the GST effectively made existing homes relatively less expensive than new homes, having a negative impact on approvals and building activity. The initiatives are tending to reverse this effect, making new homes relatively more affordable. The increase in approvals over the past few months reflects the Territorys QuickStart scheme and the Commonwealth Governments extension of the first homebuyers scheme, as well as public sector residential developments. As at 30 August, 234 applications had been made for the QuickStart grant, of which 191 had been paid. The impact of the incentives on finance commitments is reflected in the jump in approvals for the construction and purchase of new dwellings. While the impetus of the QuickStart scheme will start to fade (it had an application window of two months), it has, together with the Commonwealth scheme, brought forward residential construction activity. weak investor activity Finance commitments for investment dwellings remain weak, with the current oversupply of investment dwellings (especially units) reflected in high vacancy rates for rental properties. Although vacancy rates generally fell in the June quarter 2001, they remain historically high. Darwin, Palmerston, Katherine and Alice Springs recorded June quarter vacancy rates of 9.0 per cent, 5.9 per cent, 19.7 per cent and 2.8 per cent respectively. Magnitude of the upswing While monthly data are volatile, the leading indicators suggest that the sector is starting to recover, though from low levels, with activity likely to grow in the months ahead. The upturn will be supported by increased affordability. There was a 9.9 per cent jump in the Territory home loan affordability indicator in the March quarter 2001. Territory home loans remain considerably more affordable than the national average and are the most affordable of any jurisdiction. dependent on population and economic growth Strong employment and population growth associated with major onshore gas infrastructure would act to boost underlying demand for residential dwellings and drive the upswing in construction activity. Access Economics June quarter Five Year Business Outlook forecasts housing investment growth of over 30 per cent in 2001-02. LABOUR MARKET ABS reports employment growth Territory employment troughed in mid 2000 in line with the slowing of the Territory economy. A pick up in the employment data from mid 2000 has resulted in aggregate employment returning to levels achieved in 1999 at the peak of the cycle. Trend data for the Territory show employment increased by 0.9 per cent over the month and by a surprisingly strong 7.2 per cent in annual terms. This runs counter to anecdotal evidence of flat business activity and is certainly running ahead of the normal cyclical pattern. Full time employment increased 0.5 per cent during the month and part time employment increased by 2.4 per cent. but a jump in the measured participation rate Over the second half of calendar year 2000 and in the first half of 2001 the ABS survey shows an increased number of job seekers entering the job market, again, a surprising result given the slowdown in the Territory economy. Normally, job seekers are encouraged by jobs growth driven by stronger economic growth. The trend participation rate has increased from 67.8 per cent in June 2000 to (an amazing) 73.4 per cent in June 2001. The last time participation rates trended this high was in 1994-95, a period of strong employment (see chart) and economic growth. The long run average Territory participation rate is 70.5 per cent.