RBA Rate Rise Dreadful News For Property

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RBA Rate Rise Dreadful News For Property

Released 3 May 2006

Real Estate Institute of NSW President, Mrs Cristine Castle, said today that the Reserve Bank of Australia’s decision to increase interest rates by one quarter of one a percent will damage NSW’s struggling economy, wreak havoc with the State’s residential property market and will trigger a rental housing crisis in Sydney that will punish families and low income earners.

“This rate rise will kill off the weak recovery in the NSW property market and will have a devastating effect on the construction industry and the NSW economy,” Mrs Castle said.

“The Sydney residential property market was just getting off its knees after the NSW Government’s policy blunders of last year and the RBA’s interest rate rises of more than a year ago.”

“I appreciate it is difficult for the Reserve to balance the commodity boom in Queensland and Western Australia with the struggling economy of NSW, but this is dreadful news for mums and dad investors and people struggling to meet mortgage repayments.”

Mrs Castle said another impact of the rate rise will be a rental accommodation crisis in Sydney, which means that families and low income earners will struggle to find a roof to put over their heads.

“The Institute’s Residential Property Management Survey for April shows that vacancy rates across Sydney is now 1.9% and steadily deteriorating month by month,” Mrs Castle said.

“This rate rise will scare off investors. There are not enough homes to rent and rents are climbing. Families and low income earners will soon have no alternative but to seek public housing.”

Mrs Castle said it was now time for the State Government to step in and encourage private property investment before its crisis in public housing worsens.

Tables from the REINSW Residential Property Management Survey Results for April 2006