RBA urged to consider rate cut at next meeting
Recent figures show there is “moderating activity” in the housing market, causing one real estate body to call on the Reserve Bank to drop rates again in February.
The Real Estate Institute of Australia (REIA) said the latest housing finance figures released by the Australian Bureau of Statistics (ABS) show the number of owner-occupied finance commitments remained unchanged. The industry body noted that if refinancing figures for November 2014 were excluded, the number of owner-occupied commitments fell by 0.4 per cent.
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Decreases were recorded in all states and territories except Victoria and the ACT. Tasmania experienced the biggest fall, at 1.3 per cent. The most significant increase was recorded in the ACT – up 1.2 per cent.
“In trend terms, the number of new dwellings purchase commitments decreased by 0.5 per cent, while new dwelling construction increased by 0.2 per cent and the purchase of established dwellings remained unchanged. The value of investment housing commitments increased again, but by a more modest 0.9 per cent,” said REIA president Neville Sanders.
Mr Sanders said the number of first home buyers as a proportion of total owner-occupied housing finance commitments increased marginally to 11.6 per cent – up from the record-low 11.4 per cent recorded in October – but noted that the ABS advises caution in using this data due to “recording difficulties”.
The November lending figures indicate a moderating market, “with November being the 10th consecutive month of modest drops in lending if refinancing is excluded”, he said.
“With moderating housing lending and GDP growth below trend, inflation well within the RBA’s target zone, the RBA board should be considering a cut in interest rates at its February meeting.”
The RBA will announce its next cash rate decision at 2:30pm on Tuesday 3 February.
The cash rate remained unchanged throughout 2014, with the last cash rate movement being a 25 basis point drop from 2.75 per cent to 2.5 per cent in August 2013.
