The RBA this week decided to keep the Official Cash Rate at 2.00 per cent for the sixth consecutive month, noted the Housing Industry Association.
“Even though the markets had priced in a small chance of an interest rate reduction, the decision to leave rates unchanged will surprise few,” commented HIA Senior Economist Shane Garrett.
“Low rates are here to stay for some time to come, with economic growth below trend, very subdued price inflation and the downside risks surrounding activity in China,” Shane Garrett explained.
“Over the past year, the growth in new home building has been a vital bulwark for the economy. Low interest rates have been important in supporting healthy levels of residential construction activity. This has been one of the factors behind the plateauing of unemployment since the start of 2015.”
“While the availability of remarkably low interest rates has helped build the recovery in residential construction, we are concerned that the recently introduced credit restrictions could hamper the delivery of new housing supply and exacerbate price pressures in key markets,” concluded Shane Garrett.