The Reserve Bank of Australia recently decided to cut its official interest rate to a record low of 1.25%, but an industry professional said it would not be enough to boost Perth or Western Australia market.
Economists and housing industry representatives believe that the market needs sustained jobs growth and population growth, according to a report by ABC News. The 0.25-percentage-point rate cut would only impact the state's economy and housing sector at the margins, said John Nicolaou, ACIL Allen Consulting executive director in WA.
"Ultimately, interest rates were already very low, and so I think the community at large will be relatively immune to interest rate cuts unless they are of a particular scale of magnitude," Nicolaou told ABC News. "But certainly at the margin, a 25-basis-point cut will give a real boost to consumer spending and potentially to the property market as well."
He said the drive for long-term growth would come from the stability of the resources sector, as well as state and federal policies that could boost investment and result in more jobs.
Perth's housing market has been cooling since the end of the state's mining boom. The city’s prices dropped by 1% last month— the worst result in the country after Darwin. The median house value sat at $436,000.
WA President Damian Collins expected the rate cut could help to change the situation but also acknowledged that prospective buyers are waiting for signs of recovery.
"[It] will certainly make people feel a bit more confident about borrowing. Having said that, people still want to see signs the Perth market is recovering before a lot of people will come back into the market," Collins told ABC News.
