CASH RATE STAYS ON HOLD

CASH RATE STAYS ON HOLD

THE Gold Coast development industry has called on the banks to play their part after the Reserve Bank of Australia kept its official cash rate on hold today.

Gold Coast Logan Urban Development Institute of Australia branch president Steve Harrison (pictured) says the RBA’s interest rate cut last month gave added confidence to the construction and development industry.

But he says banks now need to play their part in the recovery of the development industry on the Gold Coast.

"Banks and financiers have been cautious about the property market since the Global Financial Crisis, but there are now clear indications that affordable land or home and land packages on the Gold Coast were still in demand, and the high rise market is recovering and offering the opportunity for future growth," Harrison says.

"There are also some big infrastructure projects in the pipeline that will transform this city, and we must make sure we make the most of their potential benefits.

"Research clearly shows that there is a diminishing stock of new apartments even in the face of increasing sales and no significant new high rise projects under construction.

"Given the long 12-18 month lead time for high rise residential projects, stock is going to run out at some stage unless action is taken now to meet future demand.

"The Reserve Bank may well cut rates again in the following months, but the banks need to show a stronger commitment to the region right now to ensure that the current level of activity is increased."

Some banks have started eating into their margins by cutting fixed rates in response to growing competition amid a lending market that remains weak.

The RBA left the official cash rate at 40-year lows of 2.75 per cent after cutting it by a quarter of a percentage point in May.

The RBA’s decision to sit on its hands this month had been expected after last month’s cut pushed the Australian dollar below parity for the first time since June last year.

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