Australia still facing elevated capacity pressures

Data released this week reinforce the need for the RBA to tighten policy settings. Provisional figures suggest that private consumption growth accelerated in Q4 and is running above the pace consistent with potential growth. Concurrently, housing finance commitments rose sharply last quarter, reflecting a broad-based pickup in housing demand. However, while housing credit is soaring, the share going towards the construction of new dwellings is at an all-time low, suggesting that supply shortages will only worsen.