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Further rate cut needed says Master Builders
Released 10 November 2011

The headline rise in housing finance in September masks weak loans for new dwellings and the Reserve Bank needs to cut rates further, according to Master Builders Australia.    

Master Builders Australia Chief Economist Peter Jones said the key finance indicator released yesterday (9 November 2011) by the ABS shows that demand for new dwellings remains flat, despite a rise in the headline figure.

“Loans for construction of dwellings and purchase of new dwellings, combined, fell in September and remain down on the same month a year ago,” he said.

“The figures pre-date last week’s rate cut and show a housing market attempting to find a floor but with consumer caution and overseas events working against a recovery.

Jones said the November rate cut will help but Master Builders believes the Reserve Bank needs to do more to boost confidence and encourage an upswing in housing.

“A sustained recovery in housing is critical because Australia-wide the residential market is underbuilding and undersupplied,” he said.

“If the residential building industry remains in the doldrums, it will be unable to meet the serious housing shortage that has arisen, risking higher rents and prices as more people chase less stock.