HIA welcomes interest rate cut

The Housing Industry Association (HIA) has welcomed the 0.25 percentage point interest rate cut - saying it's heavily needed.

HIA chief economist Dr Harley Dale said that because a recovery of the real estate construction industry is tentative, these cuts will help ensure a boost in 2013.

He commented: "A healthy new home building recovery is a prerequisite to Australia experiencing a successful transition to more balanced growth with less reliance on resources investment.

"Lower interest rates set the scene for that transition. However, government focus on productivity enhancing policies and taxation reform seal the deal and that focus simply isn't there."

Research commissioned by the HIA last week, he added, found that a recovery of the housing sector would have a broader impact on the wider economy. A boost in productivity and a reduction in unnecessary taxes would also go a long way to strengthening the industry and beyond.

The analyst said that there is a long way back to prosperity in the sector and more broadly. However, he did warn that low interest rates without any reform at a government level would not be a recipe for success.