RBA Governor tells House Economics Committee he’s watching residential construction closely

first_imgMr Lowe said there was a large amount of residential construction work still in the pipeline. Picture: Glenn BarnesTHE Reserve Bank considers residential housing construction activity an economic saviour since the mining downturn, but it’s watching the sector closely now – especially investor lending.RBA Governor Philip Lowe rounded out a busy week in the public eye with an appearance in front of the House of Representatives Standing Committee on Economics, where housing construction was front and centre for the domestic economy.Mr Lowe said RBA had expected the economy to grow by around 2.5 to 3 per cent last year, “but the outcome is likely to be lower, at around 2 per cent” because of a “surprisingly weak” September quarter.This year the early prediction was that the Australian economy would grow 3 per cent, something Mr Lowe still expected to happen.More from newsMould, age, not enough to stop 17 bidders fighting for this home2 hours agoBuyers ‘crazy’ not to take govt freebies, says 28-yr-old investor8 hours agoReserve Bank of Australia Governor Philip Lowe appearing before the House Economics Committee in Sydney. Picture: AAP Image/Joel Carrett“One area that we are watching closely is the cycle in residential construction activity, as the upswing has helped support the economy over recent years,” he said.“The rate of new building approvals has slowed, but there is a large amount of work still in the pipeline, particularly for apartments, so we still expect some further growth in this part of the economy this year. “There has, however, been some tightening in conditions for property developers in some markets.”Mr Lowe said in the broader housing market, the picture was “quite complicated”.“There is not a single story across the country. In parts of the country that have been adjusting to the downswing in mining investment or where there have been big increases in supply of apartments, housing prices have declined. “In other parts, where the economy has been stronger and the supply-side has had trouble keeping up with strong population growth, housing prices are still rising quickly. “In most areas, growth in rents is low. And recently we have seen a pick-up in growth in credit to investors, which needs to be watched carefully.”last_img