The Reserve Bank has been criticised for keeping the official cash interest rate on hold this month, as claims are made that a rate cut was required to boost the property market.
First homebuyers, in particular, need a catalyst to be encouraged to enter the market, claimed Real Estate Institute of Australia (REIA) president Pamela Bennett, and a rate cut could have provided this stimulus.
"A further reduction in interest rates would have assisted in stimulating the lower end of the market and would have made buying a home a more affordable option for young Australians," she said.
“Although just one component of the solution to housing affordability, lower interest rates are needed to reduce the proportion of income that Australians are spending on loan repayments in an effort to improve the worsening affordability situation.”
Housing Industry Association chief economist Harvey Dale added that the implications of the RBA’s rate hold will be felt in the building industry, as well as the wider economy at large.
“As it stands, the widely held expectation coming into 2012 of some further interest relief has been replaced by an apparent hold on official rates, while businesses and households count the potential cost from the possibility of further out of tune rate hikes by the banks,” he said.
“That doesn’t seem to be a healthy recipe for domestic economic activity, within which the risk of new residential building revisiting GFC-equivalent lows has increased over 2012 to date.”
The official cash rate was held at 4.25%, and the next RBA decision is due to be made on 3 April.
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