Master Builders Australia warned of risks to the building and construction industry arising from today’s decision by the Reserve Bank of Australia to raise the official cash rate by one quarter of a percentage point, the third consecutive monthly increase since rates bottomed at 3 per cent earlier in the year.
Mr Wilhelm Harnisch, Chief Executive, Master Builders Australia, said “The RBA is embarking on a risky strategy considering the still weak state of the economy, confirmed by the Government’s latest Mid Year Economic and Fiscal Outlook released a few weeks ago.”
Mr Harnisch said, “Mixed messages on the economy are coming from the RBA and the Government as the interest rate sensitive building and construction industry continues to struggle its way to a recovery.”
“It’s confusing to have the Reserve Bank working against the Government’s fiscal stimulus through higher interest rates.”
Higher rates put at risk the benefits flowing from the schools program and social housing initiative that are working to prevent a collapse in the building and construction industry.”
“The credit squeeze remains a serious problem as investor-driven commercial and residential projects are put on hold.”
Mr Harnisch said, “Higher interest rates will dent home buyer confidence and could pull the rug out from a housing market still lacking momentum as investors stay on the sidelines.” 
“As well as financial constraints, sluggish investor activity and the phasing out of the first home owners boost scheme, residential builders now face higher interest rates.”
“Rate rises can only weaken incentives for investment-related residential building and will therefore exacerbate Australia’s chronic housing supply short-fall.”
“Master Builders Australia has stressed for many years the need to remove cumbersome and costly planning requirements and solve the problem of state and local government developer charges and the rate rise will put pressure on all levels of government to overcome the chronic housing shortage.”