Property market remains "sluggish"

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Do you have that sinking feeling that whatever the Reserve Bank does to improve the interest rate outlook, the banks are still going to stifle the property market by failing to pass on the RBA's cuts in full? You're not alone.

This week’s 0.25% interest rate drop by the RBA may have been welcomed by many, but Australia’s flagging confidence levels mean that falling rates won’t be enough to boost the property market alone, it has been claimed.

According to Ken Raiss, director of Chan & Naylor accounting, stifled confidence is causing more pain than interest rates, and this is preventing money from “moving down the chain” to property investors.

Adding that not even a 0.5% interest rate drop could have kick started the “sluggish” property market, he added that a lack of competition in the lending market is strangling the economy.

“The bigger the drop in interest rates, the more the banks will increase their profits and increase their own savings,” said Raiss. “The government needs to create a price of surveillance authority that will increase competition, transparency and the strength of banks without reducing their profitability.

“Stability and a firm approach from government will do more for confidence than interest rate falls that may not even trickle down at this stage.”

Are you fed up with the disparity between the rate cuts of the RBA and the lenders? Place your comments below, or discuss the issue on our property investment forum.

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