Home building 'would be boosted by December rate cut'

If the Reserve Bank of Australia (RBA) decides to reduce interest rates further next month, the home building sector in Australia would benefit, an expert has stated.

Andrew Harvey, Housing Industry Association (HIA) acting chief economist, said a rate cut next month or early next year "is warranted" based on the economic conditions in Australia and across the world, reports Property Observer.

"If the RBA fires up with a second rate cut in December, or at latest early 2012 … then the prospect of a return to decent levels of new home building is good," he commented.

His comments come after figures were released indicating that finance to owner-occupiers for the building or buying of new homes has fallen by 5.7 per cent for the year to date.

This comes after Dr Shane Oliver, chief economist at AMP Capital Investors, asserted that there is unlikely to be another reduction in the cash rate next month, saying there is "nothing that suggests a sense of urgency".

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