Australia’s housing sector will receive a further boost towards sustained recovery if local governments will extend some tax cuts coupled with another wave of rate reductions from the central bank.
This has been the shared sentiment of the home builders and contractors group comprising the Housing Industry Association’s (HIA) and Sydney-based economist Craig James of Commonwealth Securities (CommSec).
In spite the growth in home sales recorded in April at 6.9% after posting a 9.4% decline in March, the residential property sector in Australia still needs more help in order to make this trend sustainable in the coming months.
Australia’s property builders and contractors group are convinced that another interest rate cut and some form of help from Australia’s local governments will further give the housing sector a major boost during these challenging times.
HIA chief economist Harley Dale said in a statement that interest rate reduction by the Reserve Bank could be made more effective if a portion of the current tax burden could be lifted by the government territories to encourage buying of properties.
Dr. Dale says in an issued statement that although rate cuts are not a panacea, “the key to a housing recovery lies with governments at all levels.”
CommSec chief economist Craig James said in a note to investors on Tuesday that there are indeed fundamental constraints that need be addressed by the federal and state governments and should be ironed out with home developers, industry bodies and finance providers.
Mr James has acknowledged the property sector’s multiplier effects across the Australian economy and the absence of a boost will leave a raft of other sectors without a growth momentum.