The Real Estate Institute of Australia (REIA) has stated interest rates should stay low due to the deteriorating unemployment rate.
REIA’s comments come before next Tuesday’s rate announcement, with the industry group saying the RBA should leave rates at historically low levels.
President of the REIA Peter Bushby said rates should remain low to help stimulate employment, although it must be said the unemployment figure has bounced around in recent times rather than seeing an incremental rise.
Mr Bushby also believed any rise in the cash rate would have a negative impact on first home buyers.
“Fears around unemployment are a major contributor to a decline in confidence amongst first home buyers,” Mr Bushby said.
“According to Genworth, the First Home Buyer Confidence Index slipped from 85.0 in September 2013 to 82.3 in March 2014 – the lowest level since 2007 – with uncertainty about future employment being given as the biggest barrier to buying a first home after affordability and the deposit gap,” he said.
Mr Bushby also noted that the CPI, inflation and wages growth were all in the RBA’s bandwith, meaning it had room to move on rates.
“The September meeting of the RBA board provides the opportunity for it to seriously consider a drop in the official interest rate,” Mr Bushby concluded.