The Reserve Bank of Australia today left the official cash rate at 1.50 per cent - and it looks like interest rates aren’t going anywhere in a hurry, said the Housing Industry Association - the voice of Australia’s residential building industry.

“This is an appropriate and welcome decision,” said HIA Senior Economist, Shane Garrett. “However, there has been a blanket tightening of credit conditions for investors over recent months, and owner occupiers are wary about the outlook for their borrowing costs as we continue to see banks moving unilaterally.”

“As concern mounts over the pace of growth in existing property prices in Sydney, it is more important than ever to remember that Australia consists of a vast number of housing markets,” said Shane Garrett.

“Our expectation is that the RBA will probably hold fire on interest rates over the remainder of the year, particularly with the pace of general price inflation so weak. This outlook is only likely to change should we see gyrations in the Australian dollar’s exchange rate large enough to warrant intervention by the RBA,” explained Shane Garrett.

“While low interest rates are always welcome from an affordability perspective, unlocking housing affordability remains a complex problem. Ultimately the solution lies in delivering on several fronts such as planning reform, increasing the supply of shovel-ready land, reducing the taxation burden on new housing and dealing with excessive infrastructure costs,” concluded Shane Garrett.

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