The total value of residential building work done fell by 2% in the March quarter with new dwellings down by 1.4% and renovations down by a more sizeable 5.3%.
‘The result is a concern as it suggests not only that dwelling investment will again detract from GDP growth in the March 2012 quarter, but also that the renovations side of the residential building industry is now also facing headwinds,’ said HIA senior economist, Andrew Harvey.
In annual terms, major renovations (alterations and additions) activity is down by 5.1% over the year, while new housing is down by 8.8%.
‘Renovations have been the positive news story for the residential building industry with the value of total work holding up relatively well, but there are now mounting signs that this side of the industry is slowing,’ explained Harvey.
‘This data is just another piece of evidence that current policy settings need to be amended. The official GDP growth forecasts remain too optimistic, interest rates need to be cut again next week and governments need to quickly support the domestic non resources industry, including residential building and manufacturing so that the nation is well placed to grow in the longer term,’ he added.
Meanwhile, the Australian Council of Trade Unions has called on the country’s big four banks to quickly pass on the Reserve Bank’s interest rate cut in full to ease the cost of buying property.
‘The Reserve Bank has now cut interest rates twice in two months and Australia’s big four banks cannot again use it to line their own profits. Last month, when the Reserve cut the official rate by 0.5% not one major bank passed it on in full, yet in the preceding months they were quick to lift rates even while the central bank kept them on hold,’ said ACTU secretary Dave Oliver.
He said hard working home buyers shouldn’t be forced to pay the price of the big banks fattening their margins to chase huge profits. ‘Australia’s big four banks have almost unparalleled dominance of the Australian market. Their failure to pass on the Reserve’s cut to interest rates impacts on four out of every five home loan borrowers,’ he added.
