Although the RBA has pinned its hopes on a resurgent housing sector, it appears that construction is unlikely to fill the void that mining investment is due to...

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Although the RBA has pinned its hopes on a resurgent housing sector, it appears that construction is unlikely to fill the void that mining investment is due to leave. The reasons for the malaise in construction investment are supply-side constraints: high costs, planning red-tape, and excessive taxes on new development. Australia's property transaction costs are among the highest in the developed world, representing almost 14% of a property's value. Moreover, builders are currently stifled by skill shortages, compliance costs and banks reluctant to lend. Despite Australia's chronic housing shortage and record low rates, housing investment is likely to remain stagnant.


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