RBA hold will do little for housing
By
Adam Smith
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7/09/2011 3:00:00 AM
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The Reserve Bank has left the official cash rate untouched, but a property analyst believes it will do little to help a sagging housing market.
In its decision on monetary policy , the RBA board cited declining credit growth and softening asset prices for its decision to stay its hand. RBA Governor Glenn Stevens said a high exchange rate, falling house prices and "subdued" credit demand pointed to tight financial conditions.
The decision has seen the RBA remain on the sidelines for the 10th consecutive month. Regardless of the continued interest rate stability, however, SQM Research managing director Louis Christopher believes house prices are a long way from recovery.
"Today's announcement will not change the current downward momentum of the housing market. We believe that this downturn that is with us will last well and truly into 2012 and unless there is an interest rate cut at some point within the next 10 months, house prices will decline for most capital cities in the range of 10-15%, which represents their total decline, peak to trough," he said.
Recent figures from RP Data point to a continuing decline, with capital city values falling 1.5% over the June quarter and 2.8% on a year-on-year basis. RP Data analyst Cameron Kusher said prices have experienced decline in most capital city areas, with the sharpest drops in higher priced inner city locations.
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