Figures released by the ABS yesterday showed significantly lower interest rates at the end of last year failed to kick start building activity in December.
The December fall in building approvals has highlighted the necessity of the RBA’s 1 per cent rate reduction on Tuesday as well as the government’s recently announced Nation Building and Jobs Plan.
Total approvals fell 2.9 per cent, seasonally adjusted, in December to be 32.9 per cent lower than in December 2007.
Peter Jones, chief economist at Master Builders Australia said the result validated “recent moves by the authorities to strongly engage all the macroeconomic policy levers”.
Mr Jones said the RBA’s rate reduction, the government’s stimulus package and the boost incentive for first home buyers would all contribute to a slow, but certain, recovery in the market.
“We can expect to see the stimulatory effects of looser fiscal and monetary policy eventually begin to flow through, particularly in the second half of 2009.”