Written by: Peter Jones, Chief Economist, 20 Jun 2012

National dwelling commencements for the March quarter released by the Australian Bureau of Statistics today revealed a devastating drop of 12.6 per cent.

Master Builders Australia’s Chief Economist, Peter Jones said the extremely poor dwelling commencements result reflect high levels of consumer caution and low levels of confidence.

“The figures are a major setback for an industry that has now fallen to lows experienced during the global financial crisis. This puts at risk the viability of many building and construction operations.

“The results confirm the urgency of the Reserve Bank’s decision to cut interest rates in May and June.

“Consumers are nervous due uncertainty regarding the Euro crisis, minority government and the pending introduction of the Carbon Tax.

“The glass is less than half-full for the housing sector. Jobs are being lost and more at risk.

“The Reserve Bank must consider the very poor condition of the housing sector and cut interest rates further.

“If recent rate cuts fail to stimulate the industry the residential building industry is headed for a ‘perfect storm’.

“Today’s figures will increase industry’s nervousness, particularly in the lead up to the introduction of the Carbon Tax on 1 July,” Mr Jones said.