Westpac has predicted that the housing sector will help to strengthen the Australian economy and pull it out of recession.
The housing sector has shown signs of resilience in a slowing economy, aided by first home buyers flooding into the market, off the back of low interest rates and government grants.
The bank is predicting the economy will contract by one percent this year, and grow by one percent in 2010, aided by the housing sector and property construction.
Westpac chief executive Gail Kelly said prospects for an economic recovery were sound, with households generally in a good position.
“Growth has slowed for the housing sector too, although it is being supported by the first home owners grant,” she said.
“We believe this sector is holding up relatively well and will be the first sector to lead the economy out of recession in 2010.”
Mrs Kelly said the housing sector was strong as a result of low interest rates, the absence of sub prime loans in Australia, the ongoing excess demand for housing and the absence of a sudden and large fall in house prices.