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Hold on interest rates is welcome news for property investors

According to a report in the Sydney Morning Herald, the reprieve for borrowers was welcome news for certain industry sectors too, such as construction and industrial property markets, as any interest rate rise could set them back.

Property and construction consultants Davis Langdon were pleased with the RBA’s decision, and said keeping the official cash rate at 4.5% would assist in improving building industry confidence and support the residential housing sector.

According to the firm’s Australian and New Zealand research manager Michael Skelton, anything that encourages new home construction is a good thing at the moment given the continuing decline in building approvals for residential dwellings since February this year; a trend that will compound the current housing shortage. ”Although the fundamentals in Australia’s property market continue to improve and the medium-term outlook is very positive, non-residential building approvals remain low and compressed builders’ margins and high costs of borrowing are impeding the viability of some projects,” Mr Skelton said.

Larger developers, such as Stockland and Mirvac, are also concerned that rising rates coupled with a land shortage, will be detrimental to their residential development divisions.

Chef executive of property development industry representative, Urban Taskforce Australia, Aaron Gadiel, said the decision to keep rates steady was welcome, but that public investment in the construction sector was largely responsible for the recent slow recovery in construction activity.



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About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and his opinions are regularly featured in the media. Visit Metropole.com.au


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