The Reserve Bank may have given the property market a welcome boost in issuing a 0.5% cut in the official cash interest rate this month, but news from the country’s top moneymen suggests that they don’t expect a significant house price recovery anytime soon.
According to the official monetary policy decision statement by RBA governor Glenn Stevens, hope is on the horizon, but there’s no need to crack open the champagne quite yet.
“Housing prices have shown some signs of stabilising recently, after having declined for most of 2011, but generally the housing market remains subdued,” said the statement.
The RBA also noted a weakness in demand for housing, as well as poor home building figures, pointing to low dwelling approvals and rising costs for new dwellings as areas of concern. The housing industry has said the RBA is right to show such alarm.
"It is very clear from the RBA's latest quarterly Statement on Monetary Policy that the Bank harbours considerable concern about the persistent weakness in housing construction. Weak housing construction activity is clearly weighing heavily on the wider domestic economy," said Housing Industry Association (HIA) chief economist Harley Dale.
"Further interest rate cuts are necessary and will help, but federal and state government action to remove obstacles to boosting housing supply requires urgent priority."
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