ABC News: Housing Industry Downturn predicted

A report into Australia's housing industry has warned of a downturn in supply as federal stimulus measures fade.

The Housing Industry Association's National Outlook says housing starts are forecast to fall by 4 per cent in the current financial year.

The report says last year's boost to the first home owner grant and lower interest rates helped drive a 26 per cent increase in the number of new homes built nationally.

But the HIA warns the country's housing shortage is set to get worse because not enough homes are being built to match demand.

The report also found the stimulus measures prompted a short-term recovery in new home building and helped Australia avoid a recession.

More here

RBA keeps rates at 4.5%

The Australian jumped the gun and pressed SEND, publishing an article that said the interest rates had actually risen. @melvinbuenate caught this and twitpic'd this image 

Here's the official statement from the RBA: 

At its meeting today, the Board decided to leave the cash rate unchanged at 4.5 per cent.

The global economy grew faster than trend over the year to mid 2010, but will probably ease back to about trend pace over the coming year. Recent information is consistent with a more sustainable, but still strong, pace of growth in China and most of the Asian region. In Europe and the United States, growth prospects appear to be modest in the near term, a legacy of the financial crisis and its impact on private and public finances. Financial markets are still characterised by a degree of uncertainty, and are responding both to differences in growth outlooks between regions and evident strains on public finances and banking systems in several smaller countries in Europe. Most commodity prices have changed little over recent months, and those most important to Australia remain very high.

Information on the Australian economy shows growth around trend over the past year. Public spending was prominent in driving aggregate demand for several quarters but this impact is now lessening, while the prospects for private demand, and in particular business investment, have been improving. This is to be expected given the large rise in Australia’s terms of trade, which is now boosting national income very substantially.

Asset values are not moving notably in either direction, and overall credit growth is quite subdued at this stage, notwithstanding evidence of some greater willingness to lend. Inflation has moderated from the excessive pace of 2008. The effects of the rise in tobacco taxes aside, CPI inflation has been running at around 2¾ per cent over the past year. That looks likely to continue in the near term.

The current stance of monetary policy is delivering interest rates to borrowers close to their average of the past decade. The Board regards this as appropriate for the time being. If economic conditions evolve as the Board currently expects, it is likely that higher interest rates will be required, at some point, to ensure that inflation remains consistent with the medium-term target.

Aussie Dollar may reach Parity with USD Tomorrow

Tomorrow, the Reserve Bank will gather to decide and then announce whether the interest rates will go up another 25 basis points. More importantly, they will issue a statement which will be read very carefully by currency traders around the world. If the RBA indicates that the future looks good for Australia, the AUD may reach parity with the USD tomorrow. Of course, homeowners will not be looking forward to an increase in interest rates, making their mortgage repayments more expensive and more difficult for those looking for an affordable home. However, an interest rate rise may affect demand for real estate enough to bring down prices. Keep an eye out tomorrow for the RBA decision..