Rates need to fall a further 100 basis points to bring back first-home buyers: Harry Triguboff

If Harry Triguboff were governor of the Reserve Bank, the cash rate would fall to 2.25%, a setting that the Meriton boss believes would encourage first-home buyers back into the market in a meaningful way.

In another yarn with Business Spectator’s Robert Gottliebsen, Triguboff said first-home buyers were not as responsive to interest rate cuts as they were in the past primarily because it is still cheaper to rent in places like the outer suburbs of Sydney than buy.

He believes a quarter percentage point shaved from the cash rate, as the RBA is anticipated to announce tomorrow at its December monetary policy meeting, or even a 50 basis point cut, would have little impact on the decisions of first-home buyers.

First-home buyers will only buy a property when they know it will leave them better off financially every month – when mortgage repayments are lower than rental payments.

Triguboff calls this an unprecedented attitude and one which is being felt by all developers and builders especially across the eastern seaboard and one which they did not expect.

Around a third of Melbourne residential land has been returned by building companies over the September, according to the latest report by the National Land Survey Program report carried jointly by Research Four and property consultants Charter Keck Cramer

Last week, Mirvac cancelled projects and refunded deposits on projects in Brisbane and Townsville after very low off-the-plan sales.