INTEREST RATE STALL TO HELP HOUSING RECOVERY

Written on the 6 September 2011

INTEREST RATE STALL TO HELP HOUSING RECOVERY

QUEENSLAND’S business community has welcomed today’s Reserve Bank of Australia (RBA) board decision to leave interest rates unchanged at 4.75 per cent.

Master Builders Queensland housing policy director Paul Bidwell says the RBA’s decision will help improve consumer and business confidence.

“There are some very good reasons for the RBA to keep interest rates on hold for an extended period and provide some much needed breathing space for the building and construction industry,” says Bidwell.

Bidwell predicts a rise in August finance and building approvals will coincide with the introduction of the State Government’s Building Boost Grant in the same month.

“Builders are telling us that since the boost commenced on 1 August there has been plenty of interest, which we are hopeful will translate into increased building activity,” he says.

However, Chamber of Commerce and Industry Queensland general manager Nick Behrens says keeping interest rates on hold – and not actually reducing - will only maintain financial pressures on ailing small to medium enterprises (SMEs).

“A cut in interest rates would have relieved pressure on those SMEs, who are struggling to keep their business alive,” says Behrens.

“Factors including external pressures like global instability, competitive online retailing and the high Australian dollar are making it harder for SMEs to compete and grow.”

Behrens says rising interest rates have increased the dollar’s value, which are hurting exporters, tourism operators, import manufacturers and retailers.

“Queensland businesses are overwhelmingly telling us consumers are not spending at present and rates-on-hold only compounds this trend,” he says.

Master Builders estimates that 27,000 new homes were commenced in 2010-11, representing a 20 per cent decline from the previous period.

“We are hoping for a slight improvement during 2011-2012, somewhere around 28,000 to 29,000 dwelling commencements,” says Bidwell.

Renovation activity is tipped to remain solid in 2011-2012 due to disaster recovery work.

RBA governor Glenn Stevens says global financial market conditions have been unsettled during recent weeks, with the Australian sharemarket plunging in response to falls in Europe.

“Participants have confronted uncertainty about both the resolution of sovereign debt problems and the prospects for economic growth in Europe and the United States,” he says.

“The uncertainty and financial volatility is reducing confidence and may result in more cautious behaviour by firms and households in major countries.”

The Australian Retailers Association (ARA) says the RBA’s decision gave retailers no respite, with customers having to postpone discretionary spending in the lead up to Christmas.

ARA executive director Russell Zimmerman says the retail sector is in dangerous territory.

“Consumer confidence is at an all time low, which has left the retail sector in the negative as year on year trade figures show declines across categories which rely on discretionary spend,” says Zimmerman.

“Retailers can only live in the hope that the strain of interest rates will be eased for consumers in time for the festive season by way of a rate cut in October.”


Latest News

BRISBANE VFX PRODUCTION COMPANY CLEANS UP AT MAJOR INTERNATIONAL ADVERTISING AWARDS

AUSTRALIAN production company Alt.vfx has broken records in global advertising, becoming the first business to win...

CYCLONE DEBBIE FORCES MINE, RAIL AND PORT CLOSURES AS IT WREAKS HAVOC IN QUEENSLAND

COAL and gold mines in north and central Queensland are being seriously impacted as Cyclone Debbie makes landfall ...

FLYING START TO 2017 PASSENGER NUMBERS FOR GOLD COAST AIRPORT

RECORD numbers of travellers used the Gold Coast Airport (GCA) in January this year, continuing a five-year trend ...

SUNCORP SAYS IT'S 'COVERED' AGAINST FINANCIAL COST OF CYCLONE DEBBIE

INSURER Suncorp (ASX: SUN) says it is "well protected" against the financial impact of Cyclone Debbie th...

Related News

RAY OF HOPE FOR SLATER AND GORDON AS LENDERS STEP IN

EMBATTLED law firm Slater and Gordon (ASX: SGH) has announced to the ASX that it has launched confidential discussion...

SPROUTX PROVIDES THE SEED FOR AGTECH STARTUPS

AGTECH innovation fund SproutX has opened applications for its first accelerator round, backed by $10 million from...

GAS PRICES MAY FORCE BRICKWORKS TO TAKE MANUFACTURING OVERSEAS

BRICKWORKS Limited (ASX:BKW) chairman Robert Millner says soaring energy prices may force the company to turn to offs...

CHINA CONTINUES TO COLLECT AUSSIE PROPERTY ASSETS

CHINESE coin continues to dominate Australia's offshore real estate investment market, accounting for almost h...

EVENTS COMING UP

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter