Housing industry set for recovery, Shares fall: Economy Roundup

Australia’s housing industry is on the verge of recovery, with the Housing Industry Association tipping new home stats will increase by 20% in the next two years.

HIA chief economist Harley Dale says that despite the activity created by the first home owners grant, housing supply has remained subdued.

“Since October 2008, when the first home grant was boosted, lending commitments to build new houses have increased by about 60%. But local government permits to build new houses have increased by a much more modest 20%, indicating there is a lot of new building work to come into the pipeline,” Dale says.

Dale says low interest rates, first home incentives, and a massive boost for social housing will underpin the recovery. Investors are also expected to re-enter the market as the economy grows.

“There are early signs of trade-up buyers returning to the market. But to date, investors have tended to do more selling than buying.”

Shares move lower

The Australian sharemarket has started the week on a negative note, with the benchmark ASX-S&P 200 index falling 48 points or 1% to be at 4548.1 points at 12:05 AEST.

All of the top stocks were in negative territory in morning trade. AMP shares were down 2.8% to $6.22, while NAB shares slid 2.4% to $28.33. ANZ and Westpac also dropped more than 1%.

The big corporate news of the morning came from the US oil giant Chevron, which has officially given the green light to the first stage of the Gorgon liquefied natural gas project, which will cost $43 billion.

Chevron expects LNG production will start in 2014.

In other resources and energy news, Chinese coal company Yanzhou Coal has resubmitted its application for Australian Government approval for its $3 billion bid for coal miner Felix Resources.

The Chinese company says the new bid (which is unchanged in terms of its size) is aimed at getting the deal through the Foreign Investment Review Board approval process.

Lehman Brothers collapse anniversary

Markets in Australia and around the world are also marking the anniversary of the collapse of US investment banking giant Lehman Brothers, which went bankrupt at the height of the global financial crisis last year.

US President Barack Obama will give a speech tonight where he is expected to discuss the winding down of the US Government’s involvement in the financial sector and call for global coordination to prevent future financial crises.