RBA and Government Could Overcook the Market if Interest Rates Rise Again

Speaking to a full house at a Urban Development Institute of Australia function at Crown Casino last Friday, St George Bank Head of Economic Research Steven Milch said he expects the Reserve Bank of Australia to lift official interest rates when it meets this week, despite the US Federal Reserve continuing to cut rates in the United States.

He warned that unless the new federal government can keep inflation in check, it might be one of several interest rate rises this year.

Despite a rising interest rate environment, St George research expects the number of new homes to start construction in Victoria to continue its upward spiral, as supply of land struggles to keep up with demand.

UDIA chief executive officer Tony De Domenico warned the announcement by the Brumby Government to lift the “maximum 50%” cap on land tax increases, will only result in these costs being passed by developers to home buyers.

The UDIA is a national association which promotes achieving sustainable urban development. It has lobbied against government imposed taxes – which can range up to $85,000 per block of land – saying it is contributing to the current housing affordability crisis.

Related Items :

• UDIA Victoria Says Bittersweet Day For Property Industry
• Interest Rates, Land Values to Increase Until 2009
• Biggest Property Related Issues Ahead of 2007 Election
• RBA Expected to Increase Interest Rates Again in February
• Interest rate rise
• Home Buyers, Housing Market Hurting Enough
• Interest Rate Rise Will Hurt Homeowners, REIQ Says
• More Stamp Duty Relief Needed