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New home building in Australia boomed in the fourth quarter of last year, thanks to a potent mix of government stimulus, low mortgage rates and a growing population, promising a big boost to the economy.
A total of 40,022 new dwellings were started last quarter, up 15.1 percent on the previous quarter and the highest in two years. That was the biggest quarterly gain in eight years and the second strongest since the series began in 1958.
It also came on top of an upwardly revised 11 percent jump in the third quarter and left starts up 26 percent for the year.
The jump in home supply could ultimately help cool house prices, which have risen rapidly in recent months and were one reason the Reserve Bank of Australia (RBA) decided to lift interest rates four times since October.
Yet in the near term, the surge in building could intensify competition for skilled labor between the construction industry and the booming mining industry.
"The construction sector is a sleeper that will command attention, quickly absorbing whatever spare capacity there is," said Annette Beacher, a senior strategist at TD Securities.
"We suspect that this will generate upside price pressures in building materials and boost skilled tradesmen wages as private and public sectors compete for resources."
That was one reason she expected interest rates to rise to 5.25 percent by the end of the year from the current 4.0 percent.
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