Last Monday, the Federal Government released its Mid Year Economic and Fiscal Outlook (MYEFO), hoping growth in the residential housing construction sector would take over from our deteriorating mining boom and save Australia from pending recession.
Household consumption remains solid in aggregate and there are tentative signs that residential building activity may be starting to improve. As resources investment passes its peak, the forecasts are for low interest rates and rising incomes to support modest growth in dwelling construction and non-mining business investment in 2013-14. These forecasts incorporate the 150 basis point reduction in the official cash rate since November 2011 and broadly reflect the market’s expectations for future movements in official interest rates.
A Housing Industry Association (HIA) report released today show residential construction activity continues to decline as the number of new home sales fall a further 3.7 percent in September to an now 18 year low.
» HIA says new home sales continue to slide amid crisis in consumer confidence – The Australian, 30th October 2012.
» Builders struggle as new home sales fall – ABC News, 30th October 2012.