Building approvals fell for the third time in four months at the end of 2011, adding further weight to the need for another rate cut.
“Building approvals for both detached houses and ‘other dwellings’ are at very weak levels and now is the time to further lower interest rates and implement fiscal stimulus measures,” Housing Industry Association chief economist Harley Dale said.
According to Mr Dale, the weak building approval data suggests housing starts will fall to a level below what was experienced during the depth of the GFC.
“The new home building sector is a key indicator of the health of the domestic economy and has a significant multiplier effect in terms of output and employment,” he said.
“New housing activity doesn’t need to fall further, that situation can be averted. Such aversion requires further interest rate cuts starting next week, full pass through of those rate cuts by the banks, and government measures to both stimulate new home building activity and reignite action to address the high and inefficient tax base which applies to new housing.”
In the month of December 2011, total seasonally adjusted building approvals fell by 1 per cent to be 24.5 per cent lower than in December 2010.
For the December 2011 quarter total building approvals were down by 12.8 per cent, reflecting a 27.0 per cent drop in other dwellings and a 3.5 per cent fall for detached houses.