The Real Estate Institute of Australia (REIA) commended the Reserve Bank of Australia’s (RBA) decision to introduce a 25 basis point cut to the official interest rate bringing the figure to the lowest level since the late 1950s. The official interest rate is now 2.25% after one of the longest period of interest rate stability.
REIA President, Neville Sanders, says the RBA Board has made a considered and accurate assessment of the property market taking into account economic headwinds Australia and the international community are experiencing.
“The significance of the easing monetary policy is that housing affordability in Australia will improve further, however we need today’s cut to be passed on fully by lenders.”
The most recent National Account statistics show annual growth in GDP of 2.7%, below trend, while the outlook for unemployment remains grim. The Government’s Mid-Year Economic and Fiscal Outlook forecasts the unemployment rate will peak at 6.5% in 2014-15 and will stay at this level throughout the year to June 2016.
“A cut in the cash rate will be very important in boosting consumer and business confidence,” said Mr Sanders.
“Since the RBA began its cutting of the official interest rate in late 2011, the proportion of the median family income required to meet monthly loan repayments decreased 4.4 percentage points from 34.8% to 30.4%,” Mr Sanders continued.
Last week’s, inflation figures pointed to the rate cut with the 1.7% annual change in the consumer price index indicating no pressure on the inflation outlook,” Mr Sanders concluded.
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