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$vuetify.icons.faPhone1300 650 620

Rate increase risks unnecessary slowdown

Media release

Rate increase risks unnecessary slowdown

Media release
“Leading indicators of housing activity have fallen to their lowest level in 15 years and will continue to decline as the full impact of the last 9 months of rate increases continues to compound the decline in building activity,” stated HIA’s Chief Economist, Tim Reardon.

“Loans for the purchase and construction of a new home fell in January to the weakest month since November 2008. This is before the full impact of rate increases in 2022 hit the market, let alone the February 2023 increase.

“There are significant lags evident in this cycle and the full impact of higher cash rates will not be fully reflected in economic indicators until the second half of the year, at the earliest.

“The higher cash rate is compounding the adverse impact of the rising cost of materials, labour and land as well as the increased costs of compliance due to changes to the building code.

“There remains a large volume of work underway that will be completed in 2023 which is obscuring the adverse impact of rate rises on other indicators such as unemployment and economic growth.

“By continuing to raise rates the RBA will inflict further unnecessary pain on the $120 bn housing sector and related industries,” concluded Mr Reardon.

Lending for Purchase and Construction of a New Home

Source: ABS

For more information please contact:

Tim Reardon

HIA Chief Economist

Thomas Devitt

Senior Economist
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