Rate decision won’t impact housing: CoreLogic

The Reserve Bank’s decision to keep rates steady will not have a material impact on the housing market, according to CoreLogic.

The RBA’s August decision to keep the cash rate at 4.35 per cent come after an easing of the trimmed mean inflation, soft economic growth and a gradual loosening in labour markets.

CoreLogic Asia Pacific research director Tim Lawless said while a stable interest rate decision was seen as a positive for borrowers and housing more broadly, CoreLogic wasn’t expecting the decision to have a material influence on housing trends.

“Recent growth in property prices has had more to do with low supply, tight rental conditions and demographic factors than sentiment through the housing upswing to date,” he said.

“Many of these factors are now losing their potency, with the trend rate of home sales easing as affordability becomes more challenging, migration slow and momentum leaves the upswing in rents.

“Even if sentiment lifts, an improvement in affordability barriers or strengthening in household balance sheets isn’t likely until interest rates start to fall.”

Mr Lawless said while he understood the RBA was leaving its options open, he would like to see rates revised downward if inflation trajectory continues to ease.

“Whether this will be enough to revitalise the housing growth cycle is open for debate,” he said.

“There is a possibility that affordability pressures and, eventually, a housing supply response, will keep a lid on price growth even as rates come down.

“The timing of a rate cut remains uncertain and dependent on the flow of data, especially inflation and labour force outcomes.”