Downward pressure on inflation in the housing sector vital

The chief executive of Australia’s oldest employer association has said high housing costs are a major contributor to the nation’s battle to keep inflation under control.

The Reserve Bank of Australia opted to maintain the interest rate at 4.35% in its latest meeting earlier this month, although Australian Bureau of Statistics data shows the annual rate of inflation rose in July for the first time since December 2022.

CEO Denita Wawn noted cost of buying a new home is 5% higher than this time last year, while purchase costs for newly-built homes are up close to 40% on pre-pandemic levels.

Households will likely have to wait a while longer for mortgage pressure to ease – a stress Wawn said is compounded by the ongoing problems in the construction industry including labour shortages, rising costs and planning delays.

“A number of barriers continue to hamstring the industry’s ability to speed up the delivery of new homes,” she confirmed. “Increasing the supply of new homes is crucial.”