The Real Estate Institute of Australia (REIA) President, Mr David Airey has today appealed to the Reserve Bank of Australia (RBA) to take the state of the housing market into consideration when making a decision regarding official interest rates next month. Over the past month the Australian Real Estate market has began to experience a slowdown. The market has gone from buoyant in early April, to slow and depressed today.
For months, Mr Airey has warned that continually increasing interest rates would have an adverse effect on the housing market. “The strength that was evident in the housing market in the first quarter of this year is now almost non-existent; six rates rises in eight months is unnecessary and has overwhelmed the market while it was still in recovery,” continued Mr Airey.
The impact of rate rises is most evident in the first home buyer market. In the most recent Australian Bureau of Statistics (ABS) Housing Finance figures, the number of first home buyers, as a percentage of total owner occupied housing commitments, decreased to 16.1 per cent in March 2010, compared to 18.1 per cent in February. This is the lowest for some five years, and compares to the long-run average of 20.1 per cent.
“When the ABS figures were released earlier this month, I said that first home buyers were a dying breed. I think that the RBA need to look at a wider set of figures and statistics before they ramp up rates in the future, to avoid these extremes in market conditions and anxiety it causes borrowers,” continued Mr Airey. In setting official rates, the RBA need to take into consideration, the impact of their decision on Home Buyers and Home Owners just as much as impact on inflation.