HIA questions RBA's interest rate decision

Leaders at the Housing Industry Association (HIA) have questioned the Reserve Bank of Australia's (RBA) decision not to lower interest rates.

The central bank's board members met this week – as they do at the start of every month – and eventually opted not to reduce the cash rate from its current level of 3.5 per cent.

HIA chief economist Harley Dale believes this will not help the deteriorating house building industry in Australia.

Official statistics released this week showed that construction approvals in May were up by 27.3 per cent in May, but Mr Dale thinks the long-term outlook for the sector is weak.

"Even allowing for an encouraging update for May, local government building approvals have been pointing to an annualised level of housing starts well below 140,000 for over six months now," he remarked.

Lower interest rates may have encouraged more people to take out mortgages, but it seems the HIA and other organisations will have to wait until the start of August at the earliest for any further changes.

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