The Property Council of Australia has warned that a further rise in interest rates by the Reserve Bank will be bad news for the New South Wales economy and further pin down the flat housing market.
Property Council of NSW’s executive director Ken Morrison said and the Reserve Bank needed to consider the impact on NSW families and businesses, not just the mineral boom states.
“Dwelling constructions in NSW are at a forty year low and that’s hitting the construction industry hard. Vacancy rates are also at historically low levels, at just 1.7% and rents are expected to jump a massive 40% in the next four years. This is set to put unbelievable pressure on people renting.
“An interest rate rise is only going to exacerbate the housing squeeze we have in NSW. It will inhibit more new housing from being built and it will deter renters from taking the plunge and becoming home owners. We need to be trying to step building and buying activity up a gear, not applying the brakes,” he added.
The Property Council said an across the board increase in interest rates would not address the prime drivers of inflation which lay outside NSW.
Morrison said the monetary policy is a blunt instrument and a rate rise in NSW is simply not justified.
“We hope the Reserve Bank Board will seriously consider the possible impacts a rate rise could have on the country’s largest economy. NSW needs pro-growth strategies, we need to encourage not discourage economic activity.”
“NSW is the least affordable place to buy a home. The property industry is already dealing with increased construction and labour costs. Governments across the board should be focusing on delivering more affordable housing not less,” he concluded.
By Kathryn O’Meara
