HIA lauds rate hold
The Housing Industry Association says that it welcomes today’s decision by the Reserve Bank to leave interest rates on hold, despite the widespread fears of a shakeout in the housing market.
According to the Association, the current steady approach to monetary policy is prudent given the continuing weakness in the US economy and the increasing economic risk from the drought.
Ruth Morschel says that althought the latest figures on dwelling approvals are high, attempting to choke off new home building through higher interest rates is fraught with danger.
“The new housing and renovations industry is still contributing over $9 billion each quarter to economic growth at a time when retail trade is softening and the drought is tipped to wipe 1.5 percent off growth in the coming year,” she says. “While there are fears that the home building industry is about to overshoot, signs are already emerging that demand is softening, with new home sales 24 percent lower in the three months to August.
“Concerns over the level of apartment building are valid, but we also need to recognise that changing demographics, land shortages, and increasing densities through urban consolidation are a bigger drive of this market than speculative investors.
“For the lower density detached house sector, conditions remain favourable, particularly in well located areas.”
Source: Building Products News.
2-Oct-2002