The RBA has kept the cash rate on hold for another month, and this is great news for renters, the HIA has said.
“The continued environment of remarkably low interest rates is very beneficial for renters,” said Shane Garrett, senior economist at the HIA.
Following the meeting on 6 February, the RBA board left its official cash rate at 1.50 per cent where it has been since August 2016.
“Last week’s inflation figures from the ABS showed that the pace of rental growth reached a 24-year low during 2017,” Mr Garrett said.
“This is partly due to the large volume of newly built dwellings that have arrived on the rental market over recent years.”
He said that mortgage interest costs also have a big impact on rents.
“The fact that interest rates have been so low and so stable over the past two years has taken the pressure off rents.
“During 2017, rents increased by just 0.6 per cent — the slowest pace of growth in any year since 1993.”
Mr Garret added that the RBA rates policy has held upsides for both owners and renters in the market.
“Owner-occupiers have reaped the rewards of declining interest rates over the past six years,” the senior economist said.
“Last week’s figures show that those relying on the rental market for their housing needs are also benefiting.”
On Monday, the RBA’s cash rate call was predicted by most industry experts.
The head of investment strategy and chief economist at AMP Capital, Shane Oliver, correctly predicted the RBA’s decision, but he said that despite strength in some economic indicators, factors such as low inflation, stunted wage growth, consumer uncertainty and the high exchange rate would have all been considered by the RBA in its decision to hold rates where they were.
“While confidence, jobs and non-mining investment are strong, inflation remains below target, wages growth remains around a record low, uncertainty is high regarding the outlook for consumer spending and the Australian dollar is too strong. As such, it is too early for the RBA to consider raising interest rates,” Mr Oliver said.
Independent property market economist Dr Andrew Wilson agreed, noting that a reduction in housing market activity would have also influenced the central bank’s decision to keep the cash rate on hold.
“The latest data is too benign for rate movement: low inflation, higher dollar, cooling house prices, positive labour market, declining building approvals, lower home investor activity — a mixed bag means wait and watch early days 2018 for [the] RBA,” Mr Wilson said.