02/12/2008 - 15:29

Rate slash won't cut it: builders group

02/12/2008 - 15:29

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The central bank's rate cuts may be welcome news for first home buyers but more needs to be done to entice other buyers into the market, a Western Australian builders group says.

The central bank's rate cuts may be welcome news for first home buyers but more needs to be done to entice other buyers into the market, a Western Australian builders group says.

Masters Builders Association of WA director Gavan Forster said the problem currently facing the industry was not the price of finance, but the general reluctance of non first homebuyers to commit to major purchases like a new home.

"First homebuyers, who are unencumbered by declining share and property portfolios, have reacted positively to lower interest rates and government assistance packages," Mr Forster said.

"However it is buyers in higher price categories who have put up the shutters. As a result some builders who operate in this sector have reduced staff."

Mr Forster said that while the first home market was the engine room of the housing industry, builders would have to wait until the new year to see if improved confidence permeated into other more subdued parts of the market.

Earlier today, the Reserve Bank of Australia lowered rates by 100 basis points to 4.25 per cent, with the Commonwealth Bank and the National Bank of Australia the only two banks out of the big four to pass on the full rate cut.

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