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Holding interest rates the right decision

2 Oct 13

The Real Estate Institute of Australia (REIA) has welcomed the Reserve Bank of Australia’s (RBA) hold on official interest rates with the CEO, Amanda Lynch, highlighting the importance of the low cash rate to home buyers.

“The RBA Board has made a considered and accurate assessment of the property market and we are pleased that media speculation about a housing bubble has been dampened at today’s meeting.”

The RBA has slashed official rates by a total of 2.25 percentage points since this cutting cycle began in November 2011. The official cash rate is now at a historically low level of 2.5%.

“As a result of the easing monetary policy, housing affordability in Australia is now at its lowest level in a decade. Nationally, it now takes 28.7% of the median family income to meet average loan repayments,” continued Ms Lynch.

In its September 2013 Financial Stability Review, the Reserve Bank warned home buyers to maintain realistic expectations of future dwelling price growth. The Bank associated an increase in property market activity over the past year, particularly in NSW and from investors, with the recent increases in housing prices.

“Some markets are performing well but this growth is not, by any means, Australia-wide.”

“We believe that maintaining the banks’ high lending standards is crucial to ensure continued sustainable growth in the Australian housing market.”

“Rates, however, need to stay low to provide much needed confidence to first home buyers and increase building activity,” concluded Ms Lynch.

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