Interest rate rise disappointing

2 March 2005

Reserve Bank of Australia raises interest rate to 5.5% The Reserve Bank of Australia (RBA) today announced that the official cash interest rate will rise to 5.5%.

The 0.25% increase is the first interest rate rise in 14 months since December 2003.

Real Estate Institute of SA President Robin Turner said it was very bad timing.

“The property market is in a very stable position at the moment and rising interest rates could have a detrimental affect,” Mr Turner said.

“There has been no reason to put interest rates up after the property market returned to normal levels of activity last year. In some states, prices even fell.”

“Any change to interest rates can adversely affect business and consumer confidence as the property market is a key player in the local domestic economy.”

Mr Turner said that while some economists predicted a rise some time in 2005, the decision came too soon.

“It shows the RBA is out of touch with the property market and has not properly considered Australia's steady economic position,” Mr Turner said.

“However, South Australia's housing market has defied trends recently with its ability to keep moving forward, so if anyone's going to get through this barrier it's going to be SA.”

“The confidence South Australians have in our property market is unrelenting and our affordable prices will hopefully help the State move past this.”