(16 April 2010 – Australia) The Housing Industry Association (HIA) has voiced concerns over the latest residential building figures saying that the Reserve Bank of Australia needs to adopt a cautious approach to interest rates.Australian Bureau of Statistics figures, released this week, confirmed that new residential building work fell in the December 2009 quarter.
New South Wales saw the largest decline dropping 5.3 percent, followed by South Australia by 4.8 percent and Victoria saw a reduction of 3.3 percent.
House building dropped by 1.1 percent overall to A$6.2billion and unit building reduced by 5.8 percent to A$2.6 billion.
HIA’s chief economist, Dr Harley Dale said amidst improving labour market conditions, further home price gains, and less sensitivity to rising interest rates, the outlook for total renovations activity is quite bright.
However the concern rests with new home building and the prospects for a second stage, post-stimulus recovery. Recent updates have highlighted falling new home lending, sluggish housing credit growth, and a loss of momentum in building approvals and new home sales, Dr Dale noted.
That’s not good news for a sustainable new home building recovery and highlights the need for a cautious approach to interest rates, Dr Dale added.