‘‘It shows how housing activity in general is really quite vulnerable at the moment. We had reason to believe over the last six or nine months there was a bit of recovery underway in building, but these figures would put a question mark over that again"
-Shane Garrett, senior economist for the Housing Industry Association
Approvals for the construction of new houses declined sharply in June, the Australian Bureau of Statistics said Tuesday. Building approvals dropped a seasonally adjusted 6.9% on month compared with analysts' forecasts of a 2% increase. It is a second monthly decline in a row and on a yearly basis building consents fell 13%. Local councils approved the construction of 12,778 new homes in June after 13,727 approvals in May. The Housing Industry Association has reiterated its call for the central bank to lower the interest rate again by a further 25 basis points in an effort to bolster earlier signs of recovery.
Meanwhile, the Reserve Bank of Australia said the second-quarter inflation data indicates that there is still room for further interest rates cut if the economy requires a boost. The comments follow the release last week of largely benign inflation for Q2 of 2.4%, well inside the RBA's targeted 2%-3% band. RBA Governor Glenn Stevens also said the drop in the Australian Dollar of more than 10% since April was a normal response to the slowdown in the economy as well as falling export prices, adding that the further depreciation of the nation's currency will come as no surprise. Earlier this month the central bank kept its benchmark interest rate unchanged at 2.75% for the second straight month after the Aussie slumped.
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