The Reserve Bank of Australia’s decision to cut the official interest rate to 1.5% this week will help to boost housing supply in Sydney, a property development industry group has said.
The drop in the cash rate will act as a stimulus for more housing through investors and first home buyers as repayments on loans are reduced, according to the Urban Taskforce.
“The Sydney market has been slow in the recent times and a stimulus like a lower interest rate should encourage more activity in the housing market,” Urban Taskforce CEO, Chris Johnson said.
According to the Department of Planning & Environment, 33,600 new homes are needed in the Sydney Metropolitan area each year to accommodate growth.
“Housing completions have never reached this target. From April 2015- April 2016, housing completions for the Sydney Metro Area only reached 27,208 so we still have a long way to go to meet this target,” Johnson said.
“This rate cut will help sustain growth and boost confidence in the residential property market. Despite the ongoing lack of housing supply, this interest rate cut will assist first home owners and new buyers entering the property market.”