Home loan interest rates: Metricon boss urges RBA for more certainty around potential rate rises
The CEO of Australia’s biggest home builder has called on the Reserve Bank to give Aussie buyers and home owners some clarity over the future of interest rates.
The boss of Australia’s biggest home builder has called on the Reserve Bank to give Aussie buyers more certainty by confirming they are done hiking interest rates.
The RBA held the cash rate at 4.35 per cent for the second time on Tuesday, but in delivering the decision said it would be “some time yet” before inflation reached their target level — and added “a further increase in interest rates cannot be ruled out”.
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Despite this, PropTrack economist Anne Flaherty said there was growing evidence the cash rate would not rise any further in the near future.
“Headline inflation came in at 0.6 per cent over the December quarter, the lowest growth in consumer prices since March 2021 and below the RBA’s forecasts,” Ms Flaherty said.
“This continues the trend of declining annual growth in consumer prices and increases the probability that interest rates have hit their peak in the current cycle.”
Metricon chief executive Brad Duggan said pausing rates had begun to buoy confidence.
His firm recorded a more than 2000 inquiry increase, especially among first-home buyers, in January compared to the monthly average leading up to the RBA’s last rate hike in November, 2023.
“January is usually where you see the start of interest, but this is definitely a significant increase,” he said.
“But the one thing needed is some certainty in statements from the RBA that we are done with this rate increase cycle.”
While a further hike would significantly impact sales, the executive flagged anything that lead to an “explosion in new sales” would not be ideal for the industry or buyers either, and an intermediary step of announcing the end to the rate hike cycle before cutting rates could ease a change in direction for new housing construction.
“We don’t want massive cliffs or growth, it just needs to be a well-paced and consistent,” he said.
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The firm has recorded an uptick in demand for more modest dwellings, including their 195 sqm Delta build and the 185 sqm Amira design. Both are four-bedroom, single-storey residences.
While he would not speculate on whether land prices would rise this year, he noted there would be “significant cost increases” for buyers when National Construction Code changes around new home energy efficiency and accessibility became mandatory in May.
Housing approval data released last week showed new home approvals, but particularly those for apartments, were well below historical norms in December.
They were also far below levels needed to reach a federal government target of 1.2 million new homes to be built by the end of 2029, and even further from the 800,000 new homes target set for the next decade by the Victorian state government.
Metricon’s Mr Duggan said while he’d “love” to try and build 800,000 new houses across Victoria, per the Allan Government’s plans, hitting the target would realistically require apartment and townhouse construction to increase significantly as well.
“History would suggest that getting up to those numbers, just with detached housing, wouldn’t be possible without some sort of structural changes (to the industry),” he said.
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Originally published as Home loan interest rates: Metricon boss urges RBA for more certainty around potential rate rises
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