AUSTRALIAN RATE HIKE UNLIKELY FOLLOWING DROP IN BUILDING APPROVALS.

SYDNEY, Nov 1 Asia Pulse - A sharp drop in building approvals figures in September has eradicated any remaining possibility of an interest rate hike next week, according to economists.

Building approvals fell a seasonally adjusted 19.4 per cent in September, retracing much of August's 23.1 per cent surge.

The Australian Bureau of Statistics figures also showed that private sector approvals dropped 20 per cent, wiping out most of the 25.7 per cent surge seen in August and confirming the housing market was indeed slowing down.

Despite this, private sector approvals for the September quarter rose 3.7 per cent compared to the June quarter.

"It certainly confirms that August was a blip and it still puts us on track for a fairly moderate slowdown," Housing Industry Association economist Simon Tennent said.

SG Australia chief economist Glenn Maguire said the "other dwelling" component, mainly apartments, remained about 40 per cent higher over the past two months and this could translate into oversupply concerns.

"The risk remains for downward pressure to be exerted on inner city apartment prices as rental-yields continue to decline," he said.