The Housing Institute of Australia has warned the Government that its push towards a budget surplus is jeopardising the health of the housing industry and ultimately the overall economy.
“Today’s GDP result of 0.4 per cent growth for the December 2011 quarter was well below market expectations and not helped by a 0.2 percentage point detraction from economic growth by dwelling investment,” said HIA senior economist Andrew Harvey.
“The disappointing December growth result is evidence that it is impossible to have a strong economy without a strong housing industry,” Mr Harvey said.
New dwelling investment declined by 3.9 per cent in the December 2011 quarter to be down by 4.3 per cent over the year.
Mr Harvey also said interest rates remain too high, stressing that this placed serious doubt over the Federal Government’s strategy to rush back to budget surplus.
“While the Government should balance the budget over the economic cycle, the current fragile and uncertain economic environment is not one in which either fiscal or monetary policy should be restraining economic activity,” Mr Harvey said
“It’s time to broaden the focus of policy to put in place the strategies and reforms to ensure Australia’s new housing is not over-taxed or constrained by the myriad of supply-side barriers that currently exist.”