Latest NewsHousing Body Calls for Steady RatesMonday, 22 May 2017

The Housing Industry Association is calling on the Reserve Bank of Australia (RBA) to keep rates on hold until unemployment declines sharply, a top official has told Reuters.

Australia's central bank warned earlier today a further rise in interest rates will be needed at some point in order to keep inflation contained amid the biggest mining boom in over a century.

Earlier this week, the RBA kept rates at 4.75 per cent, having led the developed world with a total tightening of 175 basis points since 2009.

"It would be appropriate to hold monetary policy at this current level until there is more evidence of how the domestic economy is tracking," chief economist of the Housing Industry Association Harley Dale said.

Mr Dale, who used unemployment as a gauge, said a rate hike would be appropriate should the current 4.9 per cent jobless rate fall rapidly and sharply to 4 percent.

Australia's low unemployment, one of the lowest and most envied in the Western world, has been on the central bank's radar and one of the reasons behind recent tightenings.

This is because the nation's economy is running near full capacity due to Asia's massive demand for its vast natural resources.

However, Mr Dale conceded the central bank is unlikely to wait for such a drop in jobless to emerge and suspected it would hike rates twice in the second half of the year.

Financial markets have priced a one-in-three chance of a rate increase as early as June, up from almost zero yesterday.

Such a tightening would further hurt Australia's mortgage-holders and an already struggling property sector, Mr Dale said.

Australia, a nation obsessed with real estate, has one of the highest ratio of home ownership in the world. About one third of the population owns a home outright, another third has a mortgage and the balance rents.

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