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The Reserve Bank of Australia’s decision to raise interest rates yesterday by 25 basis points has been criticised by the Real Estate Institute of Australia (REIA).
The REIA chairman, David Airey, said the RBA had been too hasty in its decision to raise rates.
He also said the rate rise was likely to be followed by a further 25 basis points increase next month.
“In home loan terms, I believe the variable rate will gradually rise from 5.5 per cent to around 7.5 per cent over the next 2 years,” Mr Airey told Real Estate Business.
“The RBA has lifted rates in response to the threat of a potential housing bubble. However, the risk of a bubble remains low with housing supply low and new dwellings down 50 per cent.
Mr Airey said that rather than waiting for the September figures and analysing the data carefully to see exactly where the market is moving the RBA acted on older information – the most recent being August figures.
Laing+Simmons general manager Leanne Pilkington was also disappointed see interest rates raised so soon after the first home owners boost was halved.
“This important incentive has assisted activity in the residential market and, despite being lowered, still has the potential to stimulate the lower end and improve affordability for those entering the market,” Ms Pilkington said.
“Today’s interest rate rise may cancel out some of the benefits of the boost by having a cautioning effect on that sector of the market. It would have been advantageous to ascertain the ongoing impact of the lowered boost prior to starting rates back on an upward cycle.”
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