International property and construction consultants Davis Langdon believe the Reserve Bank’s decision to leave interest rates on hold will improve building industry confidence.

Davis Langdon’s Australian and New Zealand Research & Knowledge Manager, Michael Skelton, said a pause in interest rate rises would support the residential sector with building approvals for dwellings continuing to trend down since February 2010.

“Considering the ongoing shortage in housing supply this will remain a hot topic for the foreseeable future that will need to be addressed to prevent long term housing issues,” said Mr Skelton.

“Although the fundamentals in Australia’s property market continue to improve and the medium term outlook is very positive, non-residential building approvals remain low and compressed builders’ margins and high costs of borrowing are impeding the viability of some projects.”

Mr Skelton said significant investment was required in the non-residential sectors to support the next phase of the resources boom which is the key driver of our economic prosperity.

Davis Langdon’s Construction Sentiment Survey ranked the high interest rates of 2008 as one of the biggest problems in the industry.

“Our latest survey in September hasn’t seen a return of this issue, which has slipped out of the top eight problems, indicating that the industry has greater concerns associated with constrained growth than interest rates that need to be addressed before the pressures of higher lending rates are imposed,” he said.

“Access to finance and market confidence remain the largest problems faced by the industry throughout 2010 and this is expected to be the case into 2011.”

For further information, contact Meaghan Jones on +61 3 9933 8800 or email mjones2@davislangdon.com.au 

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