Increased confidence fails to boost housing market
HOUSING finance figures released by the Australian Bureau of Statistics on Wednesday suggest improved consumer confidence is failing to translate to the housing market.
The total number of dwelling commitments fell 1.5% in January, seasonally adjusted.
The number of commitments for the construction of new dwellings fell 0.2%, while commitments for the purchase of new dwellings rose 2.3%, seasonally adjusted.
Master Builders Australia chief economist Peter Jones said the figures hardly suggested a recovery in the housing market, despite some positives for builders in the latest release.
"Loans for the construction of dwellings and for the purchase of new dwellings combined rose 0.6% from December 2012 to January 2013," Mr Jones said.
"This is an increase of 9.3% from the corresponding figure in January 2012.
"This is a welcome pick up, but a far cry from the sort of strong housing recovery builders were hoping for given where we are in the current easing cycle.
"Consumers remain overly cautious about committing to a significant purchase like housing. The industry is hoping the rise in consumer confidence will quickly translate into the new housing market."
Mr Jones said consumer confidence would need to translate into increased spending on housing if the industry was to enter a sustained recovery capable of driving growth in the non-mining sectors of the economy.
"Although Reserve Bank Governor Glenn Stevens and Treasurer Wayne Swan have repeatedly said they are looking to a revival in residential building to help drive growth as the mining investment boom peaks, it appears more policy work will be needed to facilitate this," he said.
"With consumers still reluctant to commit to housing, the Reserve Bank should cut rates further to spark an upturn in residential building."