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Minister wrong on housing

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Media Release iS


S hadow M inister for Small Business, Housing a n d Customs.


Minister Howe's comments today have overstated the potential for recovery in the housing industry and secondly are wrong on the need for a fall in interest rates.

While the housing industry has shown tentative signs of recovery over the last two months, its activity over the previous six months has been, at best, volatile.

It is worth recalling that building approvals fell for 3 of the last 6 months.

Any continued and sustainable recovery in the housing sector will be constrained by continuing high levels of unemployment, which by the government's own admission has yet to peak. Indeed, it is this continuing high unemployment which will ensure that the housing market does not overheat.

Given these factors the Minister is wrong on the need for further falls in interest rates.

Only a reduction in interest rates and a comprehensive range of reforms to the labour market and tax system will bring about a long-term and sustainable recovery in the housing sector.

(It should also be remembered that Australians still pay very high real interest rates and our commercial rates are higher than the world average.)

Finally, I would caution Mr Howe on reading too much into just two month's figures, especially when we are talking about an industry whose activities has been erratic over the last few months.

Contact: Karen Kuschert (06) 277 4717