ANZ claims low interest rates are not the main driver of the housing construction boom – the credit should go to foreign investors instead.
While record low rates have made buying a home more affordable, ANZ senior economist David Cannington believes foreign investors were more the reason for rises in new housing starts.
"Looking at the key drivers of the housing construction boom, it appears that both foreign investment and an increased appetite for higher density housing have largely driven the strong cyclical response rather than the lower cost of borrowing," he was quoted as saying in Business Spectator.
From 2013 to 2014, new homes owned by foreign nationals appeared to be responsible for the 8% increase in housing investment.
Meanwhile, Cannington said that despite the housing construction boom, sales of household items are not seeing increases. This is due to a high proportion of smaller dwellings and a higher number of new homes not yet occupied.
Cannington also said that after 10 years of inadequate supply, construction in NSW, Victoria and Queensland has just recently started keeping pace with the need for new homes.