The Australian housing market is set for a modest recovery in 2006, with home building approvals expected to have improved slightly in November. Economists are expecting approvals to have lifted 1.8 per cent in November, up from October's flat result. St George Bank chief economist Steve Ryan said building approvals were likely to have risen following a run of soft figures last year. Mr Ryan has forecast a rise of one per cent in the month. "There were about four weak months before that and then there was bounce up earlier in the year," he said. "This series has been pretty weak but the annual rate is certainly starting to come back. "If you go back just over a year, the annual rate was down 20 per cent so the monthly change is starting to level out quite a bit." He said stable interest rates would provide some support for the housing market in 2006. CommSec chief equities analyst Craig James expects approvals to have risen 1.5 per cent in November but there are still concerns the number of new dwellings being built will not keep pace with population growth. "In fact private sector house approvals stand at four-year lows," Mr James said. "Rental markets are already tightening, leading to higher rents. "And if the trend continues, increased investor activity and higher property prices won't be too far behind." National Australia Bank senior economist Jeff Oughton said despite what he anticipated would be a flat result in November, the housing sector would find support from first home owners later this year. "We see it going sideways here for a little while and then recovering a bit throughout the course of this year," Mr Oughton said. "It's driven by house prices - which we see making flat to modest gains - interest rates staying steady and continued population growth." Source:AAP