The official interest rate cut made by the Reserve Bank on Tuesday will improve housing affordability, says a major real estate association.
The Real Estate Institute of Australia (REIA) says the RBA
Board has made a considered and accurate assessment of the property market, taking into account economic headwinds Australia and the international community are experiencing.
“The significance of the easing monetary policy is that housing affordability in Australia will improve further,” REIA President, Neville Sanders said.
Sanders says since the RBA
began cutting the official interest rate in late 2011, the proportion of the median family income required to meet monthly loan repayments decreased 4.4 percentage points from 34.8% to 30.4%.
Despite some economists arguing that the interest rate cut may have perverse effects on consumer and business confidence – if consumers and businesses worry that low rates signify an injured economy – Sanders believes that improved affordability will outweigh the worry.
“A cut in the cash rate will be very important in boosting consumer and business confidence,” he said.