New home building drives GDP growth

The construction of new dwellings helped Australia’s GDP growth finish “relatively favourably and beating expectations” in 2015, according to an industry economist.

Figures recently released by the Australian Bureau of Statistics (ABS) show that GDP increased by 0.6 per cent during the December 2015 quarter.

Shane Garrett, senior economist at the Housing Industry Association, noted that the annual growth rate to the December quarter “hit the crucial 3 per cent threshold, which is consistent with the economy’s trend rate of growth”.

“New residential building played its part in beefing up the numbers,” he said, adding, “During the quarter, new dwelling construction rose by 3.6 per cent, and was some 12.1 per cent higher than the same period one year earlier.”

“One of the big messages from [the ABS] figures is that household spending growth was strong over the past year, and this was helped along by very low interest rates and strong dwelling price growth in key markets.”

Mr Garrett said the “low and stable” exchange rate for the Australian dollar is doing its job in boosting export volumes, but business sentiment remains under pressure, particularly in the natural resources area.

“This will continue to drag on growth over the coming quarters,” he added.

[Related: New home building stumbles into 2016]

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