Rate Rise Risks Housing Back In The Slow Lane

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2nd November 2010, 06:23pm - Views: 834







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Media Release







2 November 2010


RATE RISE RISKS HOUSING BACK IN THE SLOW LANE


Statement by Wilhelm Harnisch, Chief Executive


Australia’s peak building and construction industry association, Master Builders Australia,

expressed surprise and concern arising from

today’s decision by the Reserve Bank of

Australia to raise the official cash rate by one quarter of a percentage point. 


Mr Wilhelm Harnisch, Chief Executive, said “Master Builders was surprised by the timing

of today’s rate rise given the current inflation outlook.”


He said, “The timing of the rate rise will make it difficult for a private sector housing

recovery in circumstances where investor confidence remains weak.”


He said, “Master Builders calls on the banks not to lift rates beyond the move in the official

cash rate.”

Master Builders

also expressed deep concern that today’s rate rise can only further

dampen the confidence of both new home buyers and investors.”


Mr Harnisch expressed concern that today’s decision could see the new residential building

sector head for the slow lane in the two speed economy.


“The investor-driven component of the new housing market is critical in terms of ensuring an

adequate supply of affordable housing

that in turn is so

important to Australia’s productive

capacity.”


Mr Harnisch

said, “The risk is that the Reserve Bank’s interest rate strategy will only

exacerbate an already significant undersupply of housing and put further pressure on rising

rents which feed into consumer price inflation.”  

“The rate rise places even more pressure on all levels of government to confront the chronic

housing shortage.”  


For further information contact:


Wilhelm Harnisch, Chief Executive: Office (02) 6202 8888, Mobile 0402 039 039

Peter Jones, Chief Economist: Office (02) 6202 8888







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