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{{propApi.successMessage}} {{region}} Change locationRising rates do not solve material shortages
Rising rates do not solve material shortages
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Unfortunately, the 0.25 increase in the cash rate will do little to arrest the rising cost of building materials.
Demand for housing has been exceptionally strong over the past two years. Driven by record low interest rates but also due to fiscal support, strong employment conditions, rising house prices, changes to household formation and a decentralisation of population. These factors have offset the adverse impact of the loss of migration.
Demand for homes increased during the pandemic across most developed economies as households sought additional space. This has resulted in a similar boom in demand across most developed economies.
The subsequent surge in demand for building materials, combined with constraints in global supply chains, have caused a significant shortage of building materials across the world. This has seen the cost of key building materials escalate and was a major contributor to recent inflation data.
These supply constraints are a major cause of the inflationary pressure. The increase in the cash rate will slow demand for homes, but it does not ease the constraints on global supply chains, increase the supply of skilled labour or improve productivity.
Today’s increase in interest rates alone should not have a significant impact on most household budgets. It does however, send an important signal for homeowners and investors considering home purchase that the period of ultra-low interest rates, is nearing an end.
Combined with the lagged impact of migration, the volume of homes commencing construction is expected to slow to more average levels by early 2024.
Finally, concerns that this rate rise could lead to instability within the financial sector in Australia or cause extraordinary declines in home prices are unwarranted. Australia has an unquestionably strong financial system.”
For more information please contact:
Housing and Productivity Contribution Scheme Works-in-Kind Guideline
In mid-June 2025, the NSW Premier released the Housing and Productivity Contribution (HPC) Works-in-Kind Guideline for public consultation.
Government announces broader licensing powers and HBCA review
Today the State Government announced proposed changes to the regulatory powers to investigate registered builders who may be unable to meet the financial requirements of registration. The announcement also included a long-awaited review of the Home Building Contracts Act 1991 (HBCA) and associated laws.
Interest rate cuts boost building approvals
“Two cuts to the cash rate have seen the volume of detached house building approvals rise to be 3.2 per cent higher than the same month last year,” stated HIA Senior Economist Tom Devitt.
Huge task ahead to achieve 30,000 homes by 2030
“Building approvals data released today highlights the magnitude of the task ahead if we are to achieve the Government’s target of building 30,000 homes in the ACT over the next five years,” said Geordan Murray, acting HIA Executive Director ACT and Southern NSW.