Other forms of economic stimulus will be needed before long
Speaking at an event in Canberra yesterday, the deputy governor of the Reserve Bank, Guy Debelle said the central bank will need to consider other forms of stimulus given the real possibility of interest rates hitting zero in the not-too-distant future.
The same thing is happening in the UK, Canada and the US, amid calls that the world could be facing an economic cold war between the US and China that lasts a decade. Low interest rates are good news for borrowers (provided the savings are passed on by banks), but the prognosis was less than stellar for an economy struggling to gain a foothold.
This means a risk of continued stagnation in jobs, wages and productivity, with an inevitable flow-on effect for the property sector's ability to sell and start new projects.
The short-term impact of recent tax breaks however, is starting to flow through to retail spending according to CBA. It's seen tentative signs of life in the sector directly resulting from tax relief. Mr Debelle also told the Canberra crowd that signs of life in the property sector are encouraging.
One such sign is RPM Real Estate Group's latest numbers on Melbourne land sales, which suggest the decline in land sales and prices is slowing. Melbourne's outskirts have been the hardest hit in terms of greenfield sales and defaults over the past six months.
Here's another tidbit that should give property types a warm glow: while retail holding group Wesfarmers is planning to close a bunch of Target stores, 76 per cent of its earnings announced yesterday were contributed by its Bunnings and Officeworks chains. Bunnings' earnings increased 8.1 per cent in the last financial year.
NSW looking to bring back clerk of works
Yesterday was the last day of hearings for the NSW parliamentary inquiry into the building industry. In it, it was suggested that NSW reappoint a clerk of works, otherwise known as the workmanship inspector, to take the place of developer-appointed project management firms to check standards.
A chief subject throughout has been protection for consumers. Financial research and comparison group Mozo has timed its latest release well; it has punched out figures showing the average defect bill for apartments purchased in the past 10 years was $6434 compared to $5839 for a detached home.
Opal Tower construction company, Icon has shown the cost of taking responsibility. It had put aside $1 million to fix the tower's structural defects; yesterday it disclosed it has dropped a massive $24 million on the fix.
Little wonder the relatively new but rapidly-expanding construction company, Roberts Pizzarotti has drawn a line in the sand. It set up in 2017, and has spread its operations into commercial, education health and hotels - but has resolutely steered clear of residential apartments.