The RBA's latest rate rise will affect first-home buyers and investors, peak body says
The Reserve Bank of Australia’s latest interest rate hike will hurt first-home buyers and investors, according to the Real Estate Institute of Australia.
REIA said that the hike, which pushed the official cash rate to 3.85%, would put “unnecessary strain on an already stressed market.”
REIA president Hayden Groves said the organisation was disappointed that the central bank had chosen to hike rates despite recent data indicating that inflation was slowing.
“The RBA could have waited until it had additional information on the economy for its next meeting in June, including retail trade, business turnover, household spending and labour force, to assess the impact of 10 successive past increases,” Groves said.
Inflation slowing
Data from the Australian Bureau of Statistics shows that the Consumer Price Index rose 1.4% in the March quarter and 7% over the 12 months to March.
“This is down on the annual figure for the December quarter of 7.8% and is the lowest quarterly increase since the December quarter of 2021, and clearly confirms a slowdown in the rate of increase,” Groves said. “The rate of price growth for new dwellings continued to ease over the December quarter, following a record annual rise in the September 2022 quarter, reflecting improvements in the supply of construction materials and an easing in demand.”
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Groves said this week’s rate hike will put more pressure on an already stressed rental market by deterring property investors.
“Rents increased by 4.9% annually on a weighted capital city basis, the largest annual increase since 2010, and compares to 4.05 for the 12 months to December,” he said.
The Real Estate Institute of Queensland has also sharply criticised the RBA’s rate decision.
“There’s barely been time for the market to absorb the lagged impact of the previous 10 consecutive rises and reassess the approach based on this,” REIQ chief operating officer Dean Milton said in a Tuesday news release. “Equally, it’s difficult to see how would-be buyers can catch a break when their borrowing capacity has been on such unsteady footing.”
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