June has marked the 12th interest rate hike since April last year, with a rise of 25 basis points to a current cash rate of 4.10 per cent.
Real Estate Institute of Queensland (REIQ) COO Dean Milton said regulatory uncertainty was having a severe impact on investor activity.
“Building approvals in Queensland for the year-to-date in April were 2,607 below last year, showing the damaging impact interest rate rises are having on confidence,” Mr Milton said.
“Further, lending indicators show a 23 per cent decline in loans to owner occupiers this financial year, and a decline of 27 per cent in investor activity – returning the housing market to the early days of COVID.
“As Governor Lowe stated, it is now up to the government and business to drive capital investment to ease supply constraints in the economy.
He said a potential “productivity delay” in building infrastructure would have long-term impacts on the housing market.
More concern has been extended to low-income people already struggling in the market.
While RBA governor Phillip Lowe said struggling Australian’s should “cut back spending” or “find additional hours of work”, but Mr Milton doesn’t share the sentiment.
“The April inflation figures showed that inflation was being driven by prices for life’s basics such as housing, transport, and food – areas that are difficult to cut back on,” Mr Milton said.
“As highlighted by various economists the retail recession is already here.
“With household consumption accounting for 50 per cent of Australia’s GDP, we are concerned about the potential recessionary impact of these interest rate rises.
“This rate rise will further the hardship of tenants, especially those on low incomes, when striving to enter home ownership, both saving the deposit and simply qualifying for a loan.”
He said despite 12 rate-rises, inflation was “yet to be tempered”.
“… we call on APRA to reduce their serviceability buffer back to pre-December 2021 levels, as we need more investors to bring rentals to the market and opportunity for tenants to realise their dreams of home ownership,” he said.
