The plight of the building industry was in the national spotlight as interest rates were cut this week. Industry and government is calling on the banks to pass on the rate cut, noting that new home sales fell to their lowest level in over a decade in March 2012.
The month before saw ABS Building Approvals showing that the number of dwellings approved fell by 7.8 per cent to reach their lowest level in nearly three years.
The Reserve Bank Board yesterday cut the Official Cash Rate (OCR) by 50 basis points to 3.75 per cent.
Master Builders Australia chief executive officer Wilhelm Harnisch said: “Banks must mirror the cut in official rates to help new home buyers as well as providing relief for existing homeowners and small businesses struggling with repayments.”
“Today’s decision has the potential to act as an important psychological circuit breaker required to boost confidence and rekindle home buyer interest,” he said.
“The banks must play their part by fully passing on the reduction in official rates thereby ensuring today’s decision has a meaningful effect on a clearly struggling building industry.”
Housing Industry Association (HIA) chief economist, Dr Harley Dale, said “a further interest rate cut needs to follow in June.”
The HIA - JELD-WEN New Home Sales report, based on a survey of Australia's 100 largest builders, showed a sharp decline of 9.4 per cent in total seasonally adjusted new home sales in March 2012. Detached house sales dropped by 9.7 per cent while multi-unit sales fell by 6.9 per cent.
In March 2012 the number of seasonally adjusted new detached house sales fell by 9.7 per cent in New South Wales, 4.6 per cent in Victoria, 15.3 per cent in Queensland, 4.7 per cent in South Australia, and 12.0 per cent in Western Australia.
However, the major banks are expected to withhold a large pottion of the interest rate cut from their customers, with Bank of Queensland was the first lender to declare its hand, cutting home loan and business rates by only 0.35 of a percentage point last night and keeping 0.15 of a percentage point of the Reserve Bank of Australia’s 50 basis point easing.
