Low interest rates will support high levels of new home building, which will help alleviate Australia's housing shortage, says Housing Industry Assn., welcoming Royal Bank of Australia's indication that interest rates set to remain steady for some time

CAMPBELL, Australia , July 1, 2014 (press release) – Today’s decision by the RBA to leave interest rates unchanged at 2.5 per cent means that we are seeing our longest period of interest rate stability in nearly a decade, said the Housing Industry Association, the voice of Australia’s residential building industry.

“The RBA have been saying for some months now that the economy requires stable interest rates. Consequently, today’s decision is in line with our expectations,” commented HIA Senior Economist Shane Garrett. “We expect that rates will remain unchanged over the next number of months at least as unemployment remains too high and economic growth is below trend,” Shane Garrett predicted.

“The record low interest rates we have had for the past twelve months has done much to fuel growth in the most interest rate sensitive sectors of the economy,” explained Shane Garrett. “ We estimate that new dwelling starts grew by 10 per cent during 2013/14, hitting one of the highest annual totals on record,” Shane Garrett noted. “Low interest rates have also been instrumental in helping the ailing renovations market finally take a turn for the better,” added Shane Garrett.

“We welcome the RBA’s indication that rates are set to remain steady for some time,” Shane Garrett said. “Low interest rates will support high levels of new home building, helping to alleviate Australia’s housing shortage,” explained Shane Garrett. “This will be a key factor in enhancing Australia’s international competitiveness.” “However, action on freeing up land supply and improving the infrastructure funding mechanisms are just two necessary preconditions for this to happen,” cautioned Shane Garrett.

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