CEO of Urban Taskforce Australia, Tom Forrest, said that today’s RBA decision to increase the cash rate to 4.1% is a bitter blow for home buyers and, worse, it will act as a hand brake on housing supply.
Increasing interest rates will increase the cost of housing. The cost of land purchase will rise. The cost of higher interest paid on the borrowings needed to construct new homes will rise. All this pushes up the price of new homes and, adds to inflation and ironically, adds pressure to the RBA to increase interest rates!
While other central banks in major western economies have chosen to hold firm on interest rates, the RBA (in a close split 5-4 vote) has gone with the housing sector killing option.
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