Real estate industry: Hands off our interest rates!

Two-industry-bodies-are-urging-the-RBA-to-keep-interest-rates-low_157_87997_0_14081375_300A number of industry bodies have come out in support of continued low interest rates for the Australian real estate market.

Both the Real Estate Institute of Australia (REIA) and the Real Estate Institute of New South Wales (REINSW) weighed in on the interest rate debate following the Australian Bureau of Statistics’ (ABS) release of the consumer price index (CPI) figures late last month.

According to the REIA, the figures showed inflation continued to be within the the Reserve Bank of Australia’s (RBA) target zone. This meant the RBA should avoid having an itchy trigger finger when it came to raising the cash rate, REIA President Peter Bushby explained.

The REINSW, meanwhile, took the opportunity to admonish RBA Governor Glenn Stevens for undermining confidence in the property sector.

“We are not only disappointed that the RBA is giving investment advice, but that they have singled out property,” REINSW President Malcolm Gunning said in an October 22 release.

“The fact is that investors are more confident about putting their money in Australian property compared to the uncertainty of the share market and the underlying mistrust of this sector following on from the global financial crisis.”

Mr Gunning further warned against using the cash rate as a blunt object with which to slow down house price growth. Rather, he suggested, the RBA should provide guidelines for lenders for which risky practices to curb and how.

“The RBA must continue to keep interest rates on hold for the foreseeable future to help continue to boost the flagging economy,” he concluded.

Meanwhile, the CPI figures were somewhat encouraging for home buyers looking to enter the market. CPI growth for the housing growth slowed over the September quarter, at 0.5 per cent, compared to the 0.8 per cent recorded in June 2014. This suggested the market is moderating, which could make now a good time for first-time buyers to snap up a property of their own.

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