Aggressive rate cuts and tripling of the First Home Owner Grant for new dwellings should boost building activity according to the Master Builders Australia (MBA).
According to MBA’s chief economist Peter Jones, the construction industry is hopeful of an upswing in the residential sector led by first home buyer activity.
Mr Jones said that residential property has been “bouncing along the bottom” but will be boosted by fiscal and monetary policy stimulus measures as the government attempts to recession proof the economy in the face of the global financial crisis.
“With scope for further substantial falls in interest rates, most homeowners will still be able to cover their mortgage payments and given the strong pent-up demand for housing there is unlikely to be sharp fall in house prices. Once households believe that the situation has stabilised, a housing upswing will gather momentum,” he said.
Residential building activity rose by 0.9 per cent to $10.5 billion in the September quarter, seasonally adjusted. The result was 2.8 per cent on the corresponding figure a year earlier.
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