cash rate decision could affect housing construction
Looking into new home building in the near future could be a viable option for anyone considering creating their own double storey house plans and building their own new home.
Earlier this week (September 3), the Reserve Bank of Australia made the decision to retain the official cash rate at the historically low 2.5 per cent. This is fantastic news for anyone looking into lending options for buying property.
The cash rate directly affects interest rates, home loan availability and the affordability of the market.
The current rate is helping to spur on a housing industry recovery effort and according to the Real Estate Institute of Australia's president Peter Bushby, this was the best decision for the Reserve Bank heading into the future.
"In recent years, lower borrowing costs have been a major driver of improving housing affordability and have helped many Australians with their mortgages," said Mr Bushby in a September 3 statement.
"Keeping interest rates low is essential not only for encouraging first home buyers into the market but it’s vital to further stimulate building activity and provide new jobs in the housing industry."
Mr Bushby went on to state that as the monetary policy has changed during the past two years, housing affordability has increased nationwide, and the percentage of income required to meet home loan repayments is at the lowest point since June 2003.
The construction industry is also at the whims of the cash rate, with Housing Industry Association chief economist Harley Dale stating that further easing of the cash rate could help to encourage further recovery for the rest of the year.
"Residential construction is a vital cog in Australia’s economic wheel, yet a recovery in new home building activity is falling well short of the magnitude required while renovations activity is at a ten year low," said Mr Dale in a September 3 statement.
"A final round of interest rate cuts in late 2013 would coincide with a likely boost to household and business confidence following the federal election.
"That combination would help set the platform for a sustained recovery in new home construction and a turnaround in renovations investment."