IT came as no surprise that the Reserve Bank of Australia (RBA) left interest rates on hold at its first board meeting of the year on Tuesday.
Yet the Real Estate Institute of Australia (REIA) believes a rate cut was justified in order to stimulate a stagnant market.
The same message came from 1300HomeLoan managing director John Kolenda who said maintaining the cash rate at 3.0% simply left the domestic economy in a holding pattern.
The RBA last cut its cash rate in December, when it was eased by a quarter of a percentage point back to levels last seen during the global financial crisis four years ago.
REIA president Peter Bushby said if the RBA had further cut the rate by 25 basis points and the lenders had passed on the cut, affordability would have improved.
"The proportion of family income required to meet loan repayments would drop to 29.9% compared to 31.8% recorded in the September 2012 quarter,'' he said.
"On average, a household would have saved an extra $129 per month in loan repayments and average monthly loan repayments would have been reduced to $2048, or $473 a week.
"This is $179 less than the repayment figure of one year ago. The impact of last year's cuts is still not clear but with the market remaining relatively flat, potential home buyers will always love to see interest rates go down.''
Mr Bushby said the difficulties faced by those wanting to enter the market haven't been resolved and issues such as inefficient state taxes, excessive red tape and land-release delays urgently need to be addressed.
"We hope the new Minister for Housing, Mark Butler, will look seriously at implementing policies to address these issues.
"The market has remained relatively flat and housing affordability has been slowly improving over the past five quarters.
"Potential home buyers need more encouragement to enter the market and with CPI well within the RBA's target zone, there is definitely scope for further cuts.''
RP Data national research director Tim Lawless said the RBA was likely to be reasonably satisfied with how the housing market has played out since they embarked on the rate-cutting cycle back in November 2011.
"Since that time dwelling values across the combined capital cities of Australia have increased by 0.8%, and values are up 3.1% since bottoming out at the end of May last year.
"Most other indicators are also showing some subtle improvements, albeit from a low base.
"Consumer confidence has shown some improvement, commodity prices are once again on the rise, and share markets have shown some consistent gains as well.
"The big wild card remains the labour market; how high will unemployment go and at what level will the RBA react with a further cut to the cash rate.''
However 1300HomeLoan's John Kolenda said the domestic economy was going nowhere and the RBA board had failed most consumers and other struggling sectors of the economy by sitting on their hands.
"The domestic economy is a real mixed bag at the moment and if things don't get moving soon the RBA will have no choice but to take affirmative action in the months ahead.
"They still have plenty of ammunition as our official interest rate remains well above most of our trading partners - hence the continuing strong Australian dollar which is hurting exporters and the tourist industry."
Mr Kolenda said the current cash rate could be lowered by as much as 50 basis points in the short term to boost consumer activity and it was hoped this could be passed on in full by lenders.
"The cost of funding issue that has been cited by lenders as a reason not to pass on the RBA cuts in full in the past is less justified at the moment," he said.
For more on finance and property, pick up your copy of Domain free in Saturday's Sunshine Coast Daily.
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