A leading property researcher says the latest interest rate rise could prove to be a deterrent to first-home-buyers. PRDnationwide research director Aaron Maskrey (pictured) said the 0.25 per cent rate rise may take some of the momentum out of the expected rush of first home buyers to the market before the reduction to the home owners boost in late December.
“With the holiday season’s extra expenses – first-home buyers could think twice about buying with the latest rate rise as some could be priced out of the market,” he said. Mr Maskrey said recent rises to the rates have seen little “kick back” or change in spending or confidence.
“However, every increase now gets us closer to upsetting the fragile state of the economy, especially when you consider the turmoil which several major international economies find themselves in,” he said.
“So far, the RBA has had its movements spot on, as they help navigate the economy through turbulent times.
“The most recent rise should have little immediate impact to investors, but we could see long term, an increase in the number of investors re-enter the market due to the departure of first home buyers.”
The Real Estate Institute of Queensland (REIQ .called the decision by the Reserve Bank to increase the cash rate by 25 basis points to 3.75 per cent “premature considering Australia’s economic recovery is still in its infancy”.
“The increase also seems to go against the Reserve’s most recent comments on monetary policy which indicated that only if economic conditions evolved would a gradual adjustment of the cash rate be required over time,” REIQ managing director Dan Molloy said.
“The Reserve must be confident the current economic recovery is sustainable to increase rates an unprecedented three times in as many months.
“As there has been no substantial change to the economic forecast since the Reserve’s November meeting, another rate rise just a month later seems a little heavy-handed,” Mr Molloy said.
“While it is fair to say economic conditions in Australia haven’t been as dire as previously predicted, unemployment is still at its highest level in nearly eight years.
“Inflation is also easily within the Reserve’s target band and global conditions remain patchy, so it would have been preferable for the central bank to adopt a wait-and-see approach.”
Master Builders’ director of housing policy, Paul Bidwell, said that the rate rise “takes some of the gloss off strong approval figures in Queensland”.
“It remains to be seen whether the rate rise will undermine the emerging recovery in building activity. Movement in unemployment over the coming months will be a major factor in determining whether the emerging recovery continues.”
