New home data 'as expected', but no time for government complacency

Policy makers cannot presume lower interest rates are enough to maintain new home building momentum



Yesterday’s ABS housing data release showing dwelling commencements fell in the March 2013 quarter came largely ‘as expected’, according to Housing Industry Association (HIA) chief economist, Dr Harley Dale – but this is no time for governments to rest on their laurels.

"Even allowing for a higher GFC stimulus-induced peak in 2010, the subsequent drop in dwelling commencements (housing starts) over 2011 and 2012 remains significant," says Dale. "The further decline of 5.5% in dwelling commencements in the March quarter reinforces how much work lies ahead to ensure a new home building recovery is both sustainable and of a magnitude that reflects Australia's housing and wider economic needs."

Dale says the number of dwelling commencements fell in five out of six states during the quarter, while a flat result was recorded for NSW.

"On a six month annualised basis, dwelling commencements continue to track well below the housing requirements of the population in NSW, QLD, SA, WA and the NT," he adds.

"Granted, the lagged impact of lower interest rates combined with the competitive nature of the new home building sector should deliver some recovery in new home starts in mid-2013. However, any such improvement will be of insufficient strength and steam if policy makers continue to presume lower interest rates and a redirection of first home buyer assistance is all the action that is required.”

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