Housing market 'picking itself off the floor'

by Adam Smith14 Feb 2012

Home loan approvals ticked up for December, but the RBA's decision to leave rates on hold this month could hamper recovery.

ABS figures showed a rise in home loans for both construction and purchase of new dwellings, up 2.1%. Master Builders chief economist Peter Jones said the result was encouraging, but expressed concern that the RBA may need to move more aggressively to keep recovery on track.

"Although the two recent rate cuts in November and December will help, Master Builders believes the Reserve Bank still needs to do more to boost confidence and maintain a sustainable recovery in residential building," Jones said.

While Jones said recovery for housing finance remained weak by historical standards, but was beginning to show signs of life.

"The housing market is beginning to pick itself off the floor as the bring-forward effect of the government’s boost scheme fades and first home buyers respond to lower interest rates and more affordable house prices," he said.