Reserve Bank announces decision to retain cash rate level
When it comes to buying a house, regardless of whether you're a first home buyer or looking into a property investment, the cash rate is a crucial aspect to take into consideration.
The Reserve Bank of Australia announced earlier this week (September 3) that the official cash rate would remain unchanged at a historically low 2.5 per cent, which has garnered a number of reactions from various housing industry bodies throughout the nation.
The Real Estate Institute of Australia's president, Peter Bushby, has praised the decision for retaining the cash rate so close to the election.
"Housing affordability is a real issue for Australians and first home buyers need an incoming Government to address this through a comprehensive housing policy," said Mr Bushby in a September 3 statement.
"Keeping interest rates low is essential not only for encouraging first home buyers into the market but it’s vital to further stimulate building activity and provide new jobs in the housing industry."
Mr Bushby went on to say that lower borrowing costs had been a crucial aspect for increasing housing affordability in the past, and had helped many people achieve mortgages and property ownership.
"As a result of the easing monetary policy, housing affordability in Australia has been improving slightly for the past two years and the proportion of income required to meet home loan repayments is at its lowest since the June quarter of 2003."
However, the housing construction industry has stated that while the lack of cash rate change is unsurprising, further change is necessary to sustain growth.
Harley Dale, chief economist for the Housing Industry Association, said further easing of the rates will continue to help the residential construction recovery heading into the future.
"A final round of interest rate cuts in late 2013 would coincide with a likely boost to household and business confidence following the federal election," said Mr Dale in a September 3 statement.
"That combination would help set the platform for a sustained recovery in new home construction and a turnaround in renovations investment."
Chief economist at Master Builders Australia, Peter Jones, said that the decision aligns with the recent string of market recovery, but further intervention is necessary to retain the gains made.
"The challenge facing the party elected on Saturday is also to implement policies to restore business and consumer confidence which has been missing for some time," said Mr Jones in a September 3 statement.
"The new government must immediately take action to get economic policy settings right and commence the process of kick starting increased growth, productivity and employment."