Call for cut in interest rates to halt decline in new build property in Australia
03-05-2012
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HIA chief economist, Harley Dale said the Reserve Bank of Australia needs to act boldly tomorrow and cut the official cash rate by 50 basis points.
‘The Bank needs to send a clear signal that it is back on the case of assisting an economy that is clearly weaker than it anticipated in 2012. Leading housing indicators such as new home sales are pointing to on-going deterioration in already very weak new home building conditions. That situation is in turn having a major negative impact on manufacturing and services sectors,’ he explained.
‘It is not too late to turn the situation around and prevent new housing from revisiting a GFC low. Interest rate cuts, while no panacea, can provide substantial assistance in restoring confidence and activity,’ he explained.
‘Needless to say Australia's banks need to pass all official rate cuts on in full. Their actions to date on interest rates have damaged economic confidence and activity,’ he added.
The HIA - JELD-WEN New Home Sales report, based on a survey of Australia’s 100 largest builders, showed a sharp decline of 9.4% in total seasonally adjusted new home sales in March 2012. Detached house sales dropped by 9.7% while multi-unit sales fell by 6.9%.
In March 2012 the number of seasonally adjusted new detached house sales fell by 9.7% in New South Wales, by 4.6% in Victoria, by 15.3% in Queensland, by 4.7% in South Australia, and by 12% in Western Australia.
