WA property market will need more than an interest rate cut to kick start it, experts warn

PHOTO: House prices in Perth are stuck in a protracted slide. Giulio Saggin: ABC News

The Reserve Bank’s decision to cut its official interest rate to a record low is good news for housing affordability, but will not do much to drive a recovery in Perth or the state’s housing market, experts have said.

Key points:

An expert says the cut to the official interest rate will only affect WA’s economy and housing sector “at the margins”
The cut is expected to encourage some prospective buyers, particularly renters, to enter the market
But experts agree jobs and population growth are needed for any significant market turnaround

What the market does need, according to economists and housing industry representatives, is sustained jobs growth and population growth.

John Nicolaou, ACIL Allen Consulting executive director in WA, believed the 0.25 percentage point rate cut would only affect the state’s economy and housing sector at the margins.

He said the impetus for long-term growth would come from ensuring the resources sector was on a firm footing, and state and federal policies encouraged greater investment to boost jobs.