Real Estate Institute of Australia (REIA) said the RBA’s second of a series of planned rate rises furthers the need for a holistic housing and rental supply solution for Australians.
REIA President, Mr Hayden Groves said the latest interest rate rise of 50 basis points will impact on those with large mortgages in particular.
“The cash rate sitting at 0.85 will impact on households carrying a high amount of debt and will lead to an overall reduction in housing affordability by around -2.4%.
“The reality is that there is still a chronic undersupply of homes to both buy and rent across Australia so until this is addressed – including dealing with the construction backlog for new homes – we are unlikely to see any drastic shifts in response to the RBA’s rates rise agenda.
“In general, this is likely to play in the market by stabilising house price growth and sustained low vacancy rates and return to a new normal rather than the catastrophic reductions as some property commentators suggest. Certainly, transaction numbers are likely to abate as we move through this cycle.
Mr Groves said the rise in interest rates reiterates the urgent need for a national plan that addresses housing affordability and supply which has been committed to by the Albanese Government.
“The National Plan for Housing is badly needed to address the complex fiscal and monetary conditions Australians are being subjected to that deals with the fundamentals of housing supply,” he said.
“Australians are relying on this as the proportion of median income required to meet mortgage repayments will rise by 6.2% if the cash rate hits 2 per cent.”
(*benchmarked against the REIA Housing Affordability Report, December 2021).
