The Reserve Bank of Australia (RBA) has left the official cash rate unchanged at 1.50 percent on Tuesday with no plans of an imminent hike anytime soon, the Housing Industry Association said.
The association’s senior economist, Shane Garrett had welcomed the decision but felt some areas needed improvement especially when it came to tightening the conditions for investors.
“There has been a blanket tightening of credit conditions for investors over recent months, and owner occupiers are wary about the outlook for their borrowing costs as we continue to see banks moving unilaterally.”
“As concern mounts over the pace of growth in existing property prices in Sydney, it is more important than ever to remember that Australia consists of a vast number of housing markets.
“Our expectation is that the RBA will probably hold fire on interest rates over the remainder of the year, particularly with the pace of general price inflation so weak. This outlook is only likely to change should we see gyrations in the Australian dollar’s exchange rate significant enough to warrant intervention by the RBA.
“While low-interest rates are always welcome from an affordability perspective, unlocking housing affordability remains a complex problem. Ultimately the solution lies in delivering on several fronts such as planning reform, increasing the supply of shovel-ready land, reducing the taxation burden on new housing and dealing with excessive infrastructure costs,” Garrett said.
Real Estate Industry New South Wales (REINSW) president John Cunningham said the decision by the RBA to keep interest rates steady at its recent board meeting came as expected.
“All eyes are on international interest rate movements, and it is unlikely that the RBA will act until at least May.
“It is time for those who are purchasing property and existing mortgage holders to carefully review their financial position as future interest rate rises should be factored into their commitment,” Cunningham said.
The RBA cut interest rates in by 25 basis points in August and May last year. The central bank will meet next April 4, to determine the next cash rate.