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Oct 2, 2012

Rate cuts not the housing affordability cure

The Reserve Bank of Australia’s decision to cut interest rates today will be welcome news for the 36 per cent of Australian households with a mortgage, however it won’t do much for the one in three households who are renting.

AAH Campaign Manager Sarah Toohey said that the decision to cut rates by 0.25 per cent to 3.25 per cent wouldn’t necessarily help those striving to buy a home either.

“If interest rate cuts lead to house price increases, which many housing analysts suggest they will, many first home buyers will still find it hard to get in to the housing market.

“Mortgage repayments are a function of interest rates and how much people have to borrow, so interest rates are only half the picture. We need government to look at the structural problems that drive up house prices, like negative gearing.

“Interest rate cuts also don’t solve the housing problem for the 25 per cent of renters in housing stress.

“Until we have a national housing plan to actually make housing more affordable, we will continue to see people under stress across the housing spectrum.

“The RBA’s decision to reduce interest rates isn’t the solution to housing affordability. It just greases one cog in an engine that needs a full overhaul.

“We need a national housing plan that helps take the pressure off households across the board by increasing the supply of low cost rentals, and addressing the tax breaks that push up house prices” said Ms Toohey.

Media contact: Sarah Toohey, 0427 563 989

  • Richybray

    Good article Sarah. The core of the problem is Australia has been playing population catch up for so many years now. Not just with housing, but infrastructure, planning, service provision, and other areas.

  • me

    Housing affordability need to definitely be addressed as a political issue. 
    Any party that recognize this on next election and have plan and policy to fix 
    it. will easily win. 

  • Hi Sarah, your quite right !!!.  A political solution which forces both rents and housing prices down is what required …  Any mechanism which depends upon the intelligence and good will of the property sector is gauranteed to fail !!.

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