RBA alarmed by weak housing

by Adam Smith07 May 2012

The Reserve Bank has expressed concern that recovery may be some way away for the housing sector.

In its Statement on Monetary Policy, the Bank has noted weak demand for housing and poor home building. It pointed to low dwelling approvals and rising costs for new dwellings as areas of concern. The housing industry has said the RBA is right to show such alarm.

"It is very clear from the RBA's latest quarterly Statement on Monetary Policy that the Bank harbours considerable concern about the persistent weakness in housing construction. Weak housing construction activity is clearly weighing heavily on the wider domestic economy," HIA chief economist Harley Dale said.

Dale said recovery was nowhere in sight for housing construction, and called on help for the sector from the Federal Budget, due out Tuesday.

"Further interest rate cuts are necessary and will help, but federal and state government action to remove obstacles to boosting housing supply requires urgent priority," he said.