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HIA calls for lower rates to resuscitate housing industry

A fragile non-resource economy and uncertain international indicators mean that the Reserve Bank of Australia (RBA) should strongly consider dropping its interest rates, according to Dr Harley Dale, chief economist of the Housing Industry Association (HIA).

Dale asserts that a number of factors have combined to inflict "uncertainty and confusion" on investors and developers involved in the property and construction markets.

He considers the 3.5 per cent slump in consumer confidence from last month to be a direct result of disruptive issues outside the industry's direct control, possibly including recent scare market upsets and the introduction of a tax on carbon-dioxide emissions.

"New housing hit a wall in mid 2011 and residential building activity was heading towards one of the lowest levels in the last 15 years - and this is before the latest bout of weakness hit the global economy," said Dale.

Current results have shown that there has been a national drop of 12.9 per cent in the number of dwelling commencements and a 42.6 per cent decline in the number of land sales over the last year.

According to Dale, dropping the interest rates are the quickest and most appropriate method available to assist in "resuscitating" the housing industry - a statement that could provide plenty of food for thought at the next round of property management conferences.

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