Last week, Real Estate Institute of Australia (REIA) President, Mr David Airey, appealed to the Reserve Bank of Australia (RBA) to take the state of the housing market into consideration when making today’s decision regarding official interest rates.
“I am glad to see that the Reserve Bank has made an accurate assessment regarding the state of the housing market. Further interest rate rises would have only been more devastating news for Australian home buyers and the strength of the housing market,” he said.
Mr Airey highlighted recently, the slowdown in the housing market is a real concern for the economy. “The RBA now need to look at what they can do to assist in re-strengthening the housing market. One month of no change to rates is not going to do it, there needs to be stability over the longer term,” he said.
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.
“We have seen first home buyers exiting the market quite rapidly and we don’t want the rest of the market to follow,” continued Mr Airey.
“RBA put a lot of weight in meeting their inflation targets, however, taking into consideration the consequences that rate rises have on home buyers is just as critical,” he concluded.
source: Real Estate Institute of Australia (REIA)