The lower than expected increase in Australia’s Consumer Price Index figure for the September quarter is good news for the the development and construction industry, according to international property and construction consultants Davis Langdon.
Michael Skelton , Australia and New Zealand Research Manager for Davis Langdon, an AECOM company, said the figures were lower than expectations with core inflation falling from 2.7% to 2.4%.
“This is now well within the RBA’s target band of 2-3%, and the lowest core inflation figure since the December quarter 2005,” he said.
“Davis Langdon’s forecast from last quarter indicated a decline in upstream price pressures due to falling Producer Prices during the second quarter which has transpired into a softer third-quarter CPI.
“Despite Australia’s unemployment rate remaining on the verge of what is considered ‘full employment’, the softening inflation figure and the impact of higher bank lending spreads should result in a reprieve from interest rate rises for the remainder of 2010.”
Mr Skelton said construction in some regions of Australia was still faced with volatile conditions and a continued hold in the official interest rate would boost confidence in the sector.
“The construction cycle lags the economic cycle and as such, if official cash rate was moved into the restrictive zone too soon - generally considered as above 5% - this could impact the industry’s ability to meet demand spurred by economic and population growth,” he said.
For further information, contact Meaghan Jones on +61 3 9933 8800 or email mjones2@davislangdon.com.au
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Davis Langdon has compiled the information in this document from a number of sources. Davis Langdon has not verified that such information is correct, accurate or complete. Whilst every care has been taken in the preparation of this document, Davis Langdon makes no representation or warranty as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Historical trends are not necessarily a reliable indicator for actual future performance. Davis Langdon accepts no liability or responsibility to any party in respect of this document. This document has been prepared for the purpose of providing general information, without taking account of any particular person’s objectives, situation or needs. You should seek professional advice having regard to your own objectives, situation and needs before taking any action.
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