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What do low interest rates mean for the construction industry? Category: Seismic Wall & Ceiling Systems |

What Do Low Interest Rates Mean For The Construction Industry

 

 

On August 3, 2016, the Reserve Bank of Australia (RBA) decided to cut the official cash rate by 25 basis points to the record low 1.50 per cent. Master Builders Australia suggests that the decision will boost confidence in the construction sector around the country, and that's great news for anyone in the industry.

There's a low cash rate in New Zealand as well, sitting at 2.25 per cent (another record low). The previous rate cut in Australia was in May 2016, with the RBA moving the cash rate from 2 per cent to 1.75 per cent. The strength of both markets is on show with these low rates.

Why is a cash rate cut such good news?

The official cash rate dictates how much interest banks and independent lenders have to pay the Reserve Bank to borrow money. When the cash rate is low and the lenders pass that on to their customers, interest rates come down.

How can one large-scale construction stand out from the rest?How can one large-scale construction stand out from the rest?

The decision is never made lightly, however, as there have only been four cuts in Australia since September 2013, and five since September 2014 in New Zealand.

"The rate cut will help maintain confidence in the new housing market which has been a ray of sunshine in the economy, particularly in sustaining employment," stated Master Builders Australia CEO Wilhelm Harnisch.

"The rate cut should give new home buyers the confidence to enter into home ownership with the prospects of interest rates remaining at current levels for the foreseeable future."

A stable industry means jobs will be plentiful.

Alongside being good news for the housing industry, it's great for larger-scale construction as well, which is where the majority of Rondo wall and ceiling systems go. A stable industry means jobs will be plentiful, and that could have a positive impact on how efficiently construction crews are able to do their work. Investors looking to expand their portfolios with industrial buildings could see their buildings pop up a lot faster.

Will investors be looking to build in the current climate?

Property moguls are always on the lookout for more ways to expand their portfolios. Increased interest in buying homes could push them into building apartments. To make theirs more appealing than the rest, they're going to need the best materials and technology.

Rondo has just that, and with distributors all over Australia and New Zealand, it's as easy as asking for it by name. Get in touch today to find out more about what Rondo products can do for your construction.

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