The RBA’s decision to leave interest rates on hold was widely expected and the right move in the current context, as the market finds its feet this year.
January is traditionally a quiet time in terms of housing transactions, so recent reports of subdued activity are not unexpected.
Nevertheless there’s little doubt that a sense of caution has permeated the market from both the buyer and vendor sides, meaning agents will need to work harder to secure listings and generate results in the immediate future.
A steady low interest rate environment is an important support in this regard. Of course, we can only hope the banks follow the RBA’s lead and keep their rates steady too.
Certainly there’s no genuine impetus for the majors to move independently, aside from greed. Governments around the country must recognise the importance of supporting the housing market at a time when transactional activity is more subdued than it has been in recent times – if for nothing else but the revenue aspect.
With the debate surrounding a possible increase to GST kicking up a gear, Government must consider the implications of any tax reform on the residential housing market.
Tax reform should not simply be about increasing revenue, but instead should be viewed as an opportunity to create a fairer system for all taxpayers.
The brings us again, predictably, to stamp duty – the most unfair and absurd of all taxes, for which the payer receives no service. It’s also a tax that diminishes housing market activity, which actually has a counterproductive impact on Government revenue.
Any measures that could offset or ideally abolish this ridiculous tax might actually spur housing activity in the year ahead.