Written by: Peter Jones, Chief Economist, 11 Jul 2012

The May housing finance figures released today by the Australian Bureau of Statistics show new homebuyers are still hesitant and the Reserve Bank must consider further rate cuts.

The headline figure fell by 1.2 per cent, while commitments for new dwellings fell by 2.3 per cent, seasonally adjusted in May.

Peter Jones, Chief Economist for Master Builders Australia said the May figures confirm fears that the outlook for the housing market remains bleak.

“The industry was hoping for more lift in housing finance given the 50 basis point interest rate cuts in November and December 2011, but disappointingly they were not fully passed on by the banks.

“Today’s figures come too soon to fully reflect the Reserve Bank’s May rate cut, but confirm that buyer confidence remains low.

“The Reserve Bank must consider a further rate cut unless conditions take a dramatic turn for the better,” Mr Jones concluded.