Rate cut delivers boost to building

by Adam Smith08 May 2012

Home building has picked up, and May's rate cut could see even more confidence injected in the sector.

ABS figures released yesterday show dwelling approvals rose 7.4% in March, partially offsetting the 8.8% decline in February. Master Builders chief economist Peter Jones predicted the recent RBA rate cut may see further improvement in building.

"As the impact of lower rates flows through we should see the number of residential building approvals pick up in the coming months," Jones said.

Jones argued that the Reserve Bank "should not rule out" further rate cuts. He pointed to the low level of home building, claiming current levels would not meet demand.

"The current level of dwelling approvals is running at 140,000, way below what's needed to even provide for population growth let alone to begin to eat into the housing shortage estimated by the Government's own Housing Supply Council at more than 200,000 dwellings.