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 of stability.

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.