The Housing Industry Association, the voice of Australia’s residential building industry said that the Board of the Reserve Bank of Australia came to the widely expected decision to hold the official cash rate steady at two per cent.
According to HIA Chief Economist, Dr Harley Dale, discussions over the coming months will be focussed on whether the easing rate cycle is over, or another rate cut will be announced.
Harley Dale observes that the extremely low borrowing costs will remain throughout 2015/16 regardless of further reduction in the interest rate. This situation is expected to support housing activity at a time when there is little evidence of strong momentum elsewhere in the domestic economy.
New home building activity and its large positive impacts on wider activity continue to power Australia’s domestic economy, post the resources construction boom, he noted.
Harley Dale explained that Governments can build on this positive economic driver by recognising the need for a core focus on new housing in a taxation and wider economic reform program, as well as by directing urgent attention to much-needed investment in infrastructure projects in order to broaden Australia’s economic growth base.
Stating that there is over-reliance on interest rate stimulus in this cycle, he added that the elevated uncertainties and disruptions unfolding on the global stage in 2015 reinforce the urgency for greater policy balance.