Housing Industry Association (HIA) reports that the Reserve Bank of
Australia (RBA) has decided to leave the Official Cash Rate at 2.5 per cent at
its October Board meeting. RBA’s latest decision means that the interest rate
has remained unchanged for fifteen consecutive months – the longest ever period
HIA Senior Economist, Shane Garrett commented that RBA’s decision to leave
rates unchanged was widely expected. Significantly, the RBA has reiterated the
need for the economy to have a period of stable rates, providing a welcome
degree of certainty to those engaged in the housing industry, as well as other
areas of the economy.
According to Shane Garrett, this period of stable, very low interest
rates has provided a welcome boost to new home building, and is helping to
alleviate the shortage of dwelling accommodation in Australia. He predicts the
interest rates will remain unchanged until well into 2015.
Shane Garrett says that low interest rates have been important in
delivering higher rates of new home building. However, issues that continue to
stifle supply must be addressed to ensure home building meets demand over the
long term. Impediments to new supply include high stamp duty, restrictions on
residential land and inefficient infrastructure charging mechanisms.