MBA calls on RBA to shave rates further

The building and construction industry body said further rate cuts would be necessary to trigger a recovery in the slumping residential industry.On Tuesday, the ABS reported the seasonally adjusted estimate for the number of dwelling units commenced slid more than 10% nationally in the September quarter, following a 0.2% revised increase in the previous June quarter.New private sector house commencements plummeted 11% (seasonally adjusted) in the three months to September, a rapid turnaround on the June quarter’s revised rise of 5.3%.MBA chief economist Peter Jones said the organisation applauded the Reserve Bank of Australia’s aggressive rate cuts totalling 3% over the past four months, but said the RBA needed to reduce rates further to attract wary home buyers and investors back into the market.“Consumers are still bearish as a result of economic uncertainty and the global financial crisis and it will take time to turn the housing market around,” Jones said.“The unfortunate thing is that dwelling activity has been suppressed for an extended period leading to a chronic shortfall of housing.“Master Builders welcomes recent initiatives by the Rudd government designed to put a floor under the housing market and urges state and local governments to play their role in attempting to recession-proof the Australian economy.” Jones added that removing bottlenecks to approvals processes within local councils was crucial for the full advantages of the federal government’s fiscal initiatives to be received.

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