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Master Builders Australia has warned that investment in new houses will continue to suffer if inflation and interest rates don’t begin to decline, after the Reserve Bank of Australia’s announcement that rates will remain at 4.35 per cent.
Master Builders CEO Denita Wawn says that while the building and construction industry welcomed the news that the RBA has avoided lifting rates, more needs to be done to bring inflation under control and increase investor confidence in the sector.
“The building and construction industry has always been among the hardest hit by interest rate rises. Each rise over the last two years has meant a decline in building activity and new home building, prolonging the housing crisis.
“More needs to be done to bring rates down, reduce inflation and give buyers the confidence they need to invest their money in new home building.
“Australians just aren’t going to invest while the economic situation remains uncertain and project costs don’t stack up.”
The warning comes just days after the Australian Bureau of Statistics released data revealing that owner-occupier borrowing remains very weak.
Master Builders chief economist Shane Garrett said: “The lending data show that Australians are currently reluctant to enter into mortgage commitments – both for new and existing homes.
“Newly built dwelling purchase loan volumes are well below their long-term average but there are some signs of possible recovery.
“Housing investor borrowing for both existing and newly built homes is strengthening and now accounts for 46 per cent of all new home construction loans.
“Significant housing investor participation in the market is key to increasing the availability of rental accommodation and putting downward pressure on rental prices.”
Ms Wawn added: “If we are going to meet the 1.2 million new home target of the National Housing Accord, we need to see more private investment in new home building. The current economic environment is discouraging that investment.
“When the building and construction industry is strong, so too is the economy.
“Australia needs new homes and people want new homes. We need governments to make changes, to introduce an inflation circuit breaker, to encourage that investment which in turn will help to ease cost-of-living pressures while simultaneously encouraging building activity.”
Media contact: Dee Zegarac, National Director, Media & Public Affairs
0400 493 071 | dee.zegarac@masterbuilders.com.au