Housing still strong but slow-down expected

Housing still strong but slow-down expected

HOUSING activity remains a major contributor to the overall strength of the Australian economy, according to the recent national account figures.

The economy grew by 4 per cent during 2003, boosted substantially by a surging comeback by the farm sector in the December quarter.

The housing industry, however, was a very important part of the overall story, contributing better than 22 per cent to economic growth over 2003.

According to the Housing Industry Association, the figures demonstrate the importance of a healthy housing industry for the rest of the economy.

HIA senior economist Harley Dale said the strong finish to 2003 for the housing sector, where activity was up by 8.3 per cent on the previous year, would continue into 2004.

Mr Dale said a significant amount of work was still in the pipeline, while a buoyant renovations sector meant the housing sector would make further strong contributions to the nation’s economic growth in the first half of 2004.

However, he said housing activity did look set to slow modestly of its own accord in 2004-05.

“Leading indicators and industry evidence do point to the 0.5 per cent increase in interest rates late last year exerting an immediate impact on the housing sector,” Mr Dale said.