Experts suggested that the Federal Reserve of Australia stop raising interest rates.
Thomas Devitt, an economist at the Australian Housing Industry Association (HIA), said that in November 2022, the construction approval fell by 9%, including the approval of independent houses by 2.4% and the approval of apartment buildings by 19.9%.
He added that “the depth of the economic recession will be determined by the cash interest rate of the Federal Reserve of Australia.” As the Federal Reserve of Australia has experienced the sharpest interest rate increase cycle in history, it has raised interest rates by 50 basis points for four consecutive times from June to September, resulting in the cash interest rate soaring from 0.1% in April to 3.10% at the end of 2022, Devitt said, The Federal Reserve of Australia “needs to suspend further interest rate hikes in order to allow time for subsequent adjustments.” Taking into account more housing market indicators (including the 23.4% drop in new house sales in November last year) and the impact of interest rate hikes so far, he concluded that “the Federal Reserve of Australia will face increasing pressure and begin to cut interest rates in the second half of this year.” (Photo source: online) In addition, ABS data also shows that, The value of approved buildings fell by 1.5% in November, of which the value of residential buildings’ reconstruction and addition fell by 9.2%.
“This shows that the builders have completed most of the approved projects after the first interest rate increase of the Federal Reserve of Australia”.
According to the data released by the Australian Bureau of Statistics in early January, the number of independent housing approvals decreased by 12.1% over the same period in 2021 in the past three months to November, while the number of apartment building approvals decreased by 11.4%.
Investors, first-time buyers and owners began to withdraw from the real estate market.” (Photo source: Internet) He said that the current data showed that the number of houses under construction in 2023 would slow down, especially in the second half of this year, He believed that the full impact of the rate increase of the Federal Reserve of Australia from May 2022 remains to be seen.
An expert said this was another factor affecting the housing downturn.
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After adjusting for seasonal factors, the total amount of construction approval in most states in the fourth quarter of 2022 was declining, including a decline of 27.4% in Western Australia, 16.8% in Queensland, 12% in New York and 6.6% in Victoria.
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Today, according to ABS statistics, the number of building approvals fell by nearly 10% in November last year.
Devitt explained that “within two months of the first interest rate increase by the Federal Reserve of Australia in May 2022, the index of construction activity, including new house sales, began to decline.
A new study released by the Australian Bureau of Statistics (ABS) shows that the number of building approvals fell by nearly 10% in November last year.
Source: Chinese looking for houses.
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