A chance missed: REIA

The Reserve Bank’s decision to leave rates unchanged is disappointing news for home buyers, according to the Real Estate Institute of Australia (REIA). ‘‘The latest Consumer Price Index (CPI) figures are well within the Reserve Bank of Australia’s target zone of 2 to 3 per cent and should have provided a clear indicator to cut rates,’’ REIA president Pamela Bennett said. ‘‘The RBA’S governor has even indicated that he expects inflation to fall further in the next quarter or two. ‘‘A further cut would have assisted those who are currently paying off a mortgage and would have been the encouragement needed for first-home buyers.’’ The REIA’S Deposit Power Housing Affordability Report for the September quarter showed a a small improvement in housing affordability but REIA would like to see a greater change over consecutive quarters. ‘‘We know that first-home buyers are starting to return to the property market but another reduction would have assisted in stimulating the lower end of the market and provided a ripple effect to those buyers trading up,’’ Ms Bennett said. ‘‘Although just one component of the solution, lower interest rates are needed to reduce the proportion of income that Australians are spending on loan repayments in an effort to improve housing affordability.’’ Housing Industry Association believes the decision was a missed chance to bolster business and household confidence. ‘‘A rate cut would have been appropriate for current economic conditions, but sadly that decision was not taken,’’ HIA chief economist Harley Dale said. ‘‘The global and domestic economic outlook remains clouded, within which new housing activity in Australia faces the risk of re-visiting GFC lows.’’ He said the lack of movement follows widespread expectation for a cut and an increasingly aggressive debate regarding what Australia’s banks would and should do with such a cut. ‘‘Against this backdrop, leaving rates unchanged has the potential to weigh down on confidence and non-resource economic activity,’’ Mr Dale said. He said despite the RBA’S decision, it would be helpful if banks moved to provide some further interest rate relief to Australian businesses.