The Housing Industry Association, the voice of Australia’s residential building industry, reports that the Reserve Bank of Australia has resolved to hold the cash rate steady at 2.00 per cent.
According to HIA Chief Economist Harley Dale, the Bank has signalled that the Official Cash Rate will remain at its historical low of 2.00 per cent over the coming months.
Describing it as an expected decision, Harley Dale observes that RBA’s stance of holding rates steady while keeping the door open for a further reduction if required, is appropriate under current economic conditions.
By holding the rates, RBA continues the highly favourable interest rate environment to assist housing demand, which is very important given that the new home building sector is providing a vital boost to an otherwise under-performing domestic economy.
Harley Dale commented that the RBA Board statement also alluded to the strong dwelling price growth in Sydney. He notes that strong price growth is only evident for Sydney; therefore, any corrective action by regulators must be very targeted, so as not to adversely affect broader housing demand.
Harley Dale concludes that residential building is one of the few bright lights in the economy at the moment, and it would be unwise to interfere in the market to an extent that risks derailing activity in this crucial sector.