HIA: RBA signals steady rates as policy reform needs priority attention

The Reserve Bank of Australia announced their decision to keep interest rates on hold at 2.5 per cent for a fourth consecutive month in December.

“Following the last interest rate cut in August it became increasingly evident that the RBA was done for the year; and so that has proven to be the case,” said Housing Industry Australia Chief Economist, Dr Harley Dale.

“Australia’s rebalancing act with economic growth is only at a nascent stage and the RBA needs to stand ready to lower interest rates further if the economy lacks momentum heading into 2014,” remarked Harley Dale.

“The residential construction industry can be a key driver of the rebalancing of growth given the large reach that new home building and renovations activity has into wider areas of the economy, most notably retail and manufacturing. A modest first stage recovery is underway in new housing, aided considerably by very low interest rates, but there is a long way to go to achieve healthy construction levels,” noted Harley Dale. “Meanwhile renovations activity has yet to lift itself from a ten year low.”

“For residential construction to play its traditional lead role in an economic up-cycle there will need to be a Federal government-led focus on reforming the inefficient and excessive taxation and regulation of new housing, together with a solution found to the lack of readily available finance for residential development which continues to constrain industry activity,” concluded Harley Dale.

Posted by Charles Tarbey on 06/12/2013 at 12:00 AM | Categories:

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