The Reserve Bank’s decision to hold the official cash rate steady at 3 per cent has been welcomed by the housing industry.
The move is a “sensible” one, said the Housing Industry Association (HIA), arguing that the reductions in home mortgage rates have played a pivotal part in stimulating new home development.
“It will be important to keep interest rates stable over 2009/10 to support activity and confidence as a tentative housing recovery runs into the headwind of rising unemployment,” Dr Ron Silberberg, HIA managing director, said.
“The industry outlook is by no means assured,” he said. “Ordinary home buyers could be excused for becoming confused by the constant speculation about busts, bubbles and booms,” Silberberg said.
Talk of near-term increases in official interest rates could damage the early signs of recovery in new home building, he said.
Reports from builders reveal that the availability of skilled trades labour has increased and prices for trades have moderated, according to the HIA.
“The recovery needs to be more broadly based and the prospects of this occurring are being severely hampered by a lack of available development credit and too little competition in the home mortgage market,” Silberberg said.
