On Tuesday, the Reserve Bank raised interest rates for the 4th time this year with additional hikes in rates anticipated for later this year and potentially early 2027.
Official interest rates are now the highest that have been for 15 years, and Australia now has the second highest official interest rates of the 'developed economies' second only to Iceland!
The big banks and economic commentators no longer debate whether there will more rate rises; it is widely accepted. This is itself a worrying sign because it accepts that inflation will remain high for some time to come, and inflation is a huge problem for our industry as Master Builders has been warning for months.
This latest hike in rates means NSW builders and households are again being forced to pay for the failure of the Federal Government’s economic management.
As Master Builders CEO Matt Polllock said:
“It is not fair that NSW households and businesses are being left to do the heavy lifting to get inflation under control. They didn’t print, borrow, and spend the money which created inflation. But they are the ones being slugged with the high interest rates required to fix the inflation problem.
In NSW, the Federal Government’s fiscal settings are undermining the Minns Government’s reforms to cut red tape, speed up building approvals and increase productivity in the residential construction sector,
We now have a ridiculous scenario where house prices are failing at the fastest rate in 40 years, but housing affordability is not improving.
The management of the economy is now so bad that it has made it harder for people to buy a home, despite tax changes designed to crash house prices.
This is all the evidence we need that the Federal Government’s increase in Capital Gains Tax (CGT) and changes to negative gearing have failed.
The compounding impact of inflation is much more damaging than higher interest rates. It is inflation that is making housing more expensive, with construction costs escalating to a point that projects feasibility is now the largest roadblock to increasing supply."
