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Fall in approvals justifies RBA decision
Released 3 February 2012

Residential building approvals fell back again in December justifying an early RBA rate cut, according to Master Builders Australia.     

“Dwelling approvals are down by one quarter on levels of a year ago, with further RBA rate cuts needed to boost confidence and turn building activity around,” Master Builders Australia Chief Economist Peter Jones said.

“Master Builders urges the banks to pass on any forthcoming rate cuts despite their concerns regarding cost of funds associated with European sovereign debt problems.”

He said with the trend estimate for dwelling approvals falling for 14 months and for non-residential building approvals 12 months, lower interest rates are needed to underpin declining activity.

“The latest building approval figures are in line with findings of the latest Master Builders’ national survey which reveals that industry profits are under pressure and jobs may go.

“Builders are reporting falling sales and forward orders as consumer caution, European economic woes and difficulties accessing finance work against any recovery.”

He said with the immediate challenge to restore confidence and drive a private sector recovery, the building industry is banking on further rate cuts to help boost confidence and stabilise an uncertain market.

“Master Builders Australia believes that the November and December rate cuts by themselves won’t be enough and calls on the Reserve Bank to lower rates next week to reignite activity in the building industry.”