How does a 0.5% drop in interest rates sound? This is exactly what property industry leaders are asking for, as pressure mounts on the RBA and the nation's banks to aid a property market recovery this year.
The latest call to action comes in the wake of disappointing housing finance figures from the Australian Bureau of Statistics (ABS), which reveal that the country’s total number of seasonally adjusted loans for owner occupiers fell by 2.5% in February.
“Policy makers have misread the Australian economy and action is required now,” said Housing Industry Association chief economist Harley Dale. A 50 basis point cut in interest rates is required on May 1 and the banks need to pass that on in full.”
The HIA noted that February’s drop in housing finance commitments was influenced by a “hefty” drop in first homebuyer loans in New South Wales – where the number of loans for the purchase of a new dwelling dropped by 10.4%.
Overall, seasonally adjusted estimates from the ABS for number of owner occupied housing commitments were as follows:
- NSW: -9.4%
- Qld: -1.1%
- Tas: -5.3%
- ACT: -1.7%
- NT: -0.4%
- SA: +2%
- WA: +0.8%
- Vic: +0.3%
Commenting on the latest ABS figures, Loan Market corporate spokesperson Paul Smith noted that “the simple truth is that the RBA ‘wait and see’ pattern is coming to a head, with a range of downward economic indications”.
“According to the latest figures, consumer confidence has also fallen to its lowest level in eight months and sectors such as retail and housing are crying out for some action by the RBA.”
Australian business too has leant its voice to the 0.5% rate cut cause, with the Australian Chamber of Commerce and Industry (ACCI) stating that such a cut is required to boost business and consumer confidence before new taxes hit home in July.
"The time has come for Australia’s central bank to move decisively to cut rates by a full half a per cent, and for the retail banks to immediately pass it on. A quarter of a per cent cut would not be enough to do what is required. There needs to be significant and unambiguous signal, to support activity and to lift confidence across the next quarter," said ACCI chief executive Peter Anderson.
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