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Independent housing report urges RBA to heed advice on interest rates

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The Real Estate Institute of Australia (REIA) has called on the Reserve Bank to consider the impact of interest rates on housing supply, following the release of the State of the Housing System 2024 Report by the National Housing Supply and Affordability Council.

REIA President Leanne Pilkington, who attended the report’s launch at the State Library of New South Wales, said the report provided a comprehensive analysis of the factors limiting the supply of new homes to market, which was particularly relevant in the lead-up to the Federal Budget.

“Of relevance ahead of the Reserve Bank’s meeting this week is the abhorrent impact of interest rates on housing supply – the root of the current housing crisis,” Pilkington said.

“The Council said a decline in interest rates of 50-basis points would boost net housing supply by 54,000 dwellings and a rise of 50-basis points would decrease net supply by 45,000 dwellings.
“We hope the RBA heeds this warning shot issued by the Governments independent housing advisor.”

The Council’s projections indicate a significant shortfall of new supply relative to new demand of around 37,000 dwellings in the current financial year, with the six-year shortfall widening to only 39,000 dwellings.

“Feedback from the marketplace suggests that that is optimistic at best and more extreme support measures will be needed,” Pilkington said.
“Indeed, last week’s ABS building approvals reflected only 12,947 private sector approvals Australia wide in March 2024.”

Pilkington welcomed the report’s holistic analysis of taxation treatments in housing, which recognised the integral role negative gearing plays in housing supply.

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REIA, established in 1924, is a federated body of State & Territory Real Estate Institutes representing 85% of Australian real estate agencies.

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