The value of building approvals in November was $2.85 billion higher than the monthly average for the first half of 2009.

When the Australian Bureau of Statistics (ABS) releases building approvals every month, economists typically pay most attention to number of residential building approvals.

The 5.9 per cent increase in residential approvals reported by the ABS on Wednesday brought the total to a 21-month high.

The rise in the total number of residential approvals was the result of a 28 per cent surge in the “other” category, an exceptionally volatile category which includes multi-residence developments - apartments, townhouses and the like.

The last monthly change of less than 16 per cent in either direction was in April last year.

Since then, approvals in the multi-residence category fell 38 per cent in May, then rose 16 per cent in June and 34 per cent in July, before falling by 17 per cent in August, rising 34 per cent in September, then falling 22 per cent.

And all that was after adjustment for seasonal variations.

So not too much should be made of one month’s change in the total.

The category, which includes only houses and is much less volatile, should be seen as the bellwether for the housing sector.

Approvals to build houses fell 1.9 per cent in November, seasonally adjusted.

The fall brought an end to a run of gains in each of the first 10 months of 2009, which in turn followed falls in each of the final 10 months of 2008.

Figures released by the housing Industry Association of Australia on Tuesday showed sales of new homes levelled off in November, after falling in October from a mini-surge in the preceding two months.

So it may be that the dip in house-building approvals in November after the long run of rises is a sign of things to come.

That would be consistent with the expected effect of interest rate rises in October, November and December last year, and the prospect of more to follow in the months ahead.

On the other hand, the ABS report also showed the value of non-residential building approvals - which generally receives less attention from economists - surged by $1.54 billion, or 53 per cent, to $4.47 billion in November, to be more than double the level recorded a year earlier.

In contrast, the value of residential approvals in November was $3.67 billion, up by $60 million or less than two per cent from October and by $678 million or 23 per cent from a year before.

The non-residential sector is clearly the driving force behind the overall increase in total approvals, which have averaged $7.41 billion per month since the middle of 2009, an increase of $2.13 billion per month over the first half.

The November level, $8.12 billion, was higher still.

Despite some hints of slower growth in demand for housing, the building industry as a whole is still adding to the economy’s momentum.

AAP