The Reserve Bank, which appears to have only one weapon in its fight against inflation, today raised interest rates yet again - the third rise in six months.

The Official Cash Rate is now 7.0%. The RBA has lifted rates repeatedly (now at their highest level since mid-1996) to rein in inflation. Clearly it?s not working, but clearly the RBA doesn?t have a Plan B.

Their actions are in stark contrast to the United States Federal Reserve, which has cut 1.25 percentage points off interest rates in the past month.

The HIA?s managing director Ron Silberberg says: ?Monetary policy is a blunt instrument and its impact on Australian households battling to make ends meet must be considered in more detail ? Because the Consumer Price Index seems to be driving monetary policy, it is ovedue to review the structure and composition of the CPI.?

Ironically, the upward cycle in interest rates may benefit property investors. It further restricts the ability of households to buy a first home and it further discourages developers from supplying new product, exacerbating the current climate of housing undersupply, low vacancies and rising rents.

The Federal Government will donate up to $1,500 a year to people who use first home saver accounts to amass a deposit to buy a home.

The Government will contribute $750 for every $5,000 people save. Those who save $10,000 in a year towards a home will receive $1,500 from the Government.

The scheme is expected to cost the Government $850 million over four years. The first home saver accounts will be special accounts managed by super funds, starting from 1 July this year. They will require people to save for a minimum of four years before being able to access the funds.

The move has been welcomed by the Housing Industry Association, which says measures to promote savings and reduce reliance on debt are to be encouraged.

Adelaide’s rental market has tightened further, with a vacancy rate below 1% in December, according to the Real Estate Institute of South Australia.

The current vacancy rate of 0.7% compares with an already-tight 1.6% in November. Despite that, the REISA says there is less tenancy demand than a year ago and the lower vacancy has been caused by a reduction of stock in the market - with many rental properties having been sold in the existing strong sales market.

All sectors of the market report a vacancy rate below 1%, except for the northern suburbs with 1.1%. The Adelaide Hills district continues to report zero vacancies.

The REISA says rents continue to rise steadily and any home asking less than $250 a week is highly-soughtafter.

A growing number of Melbourne suburbs are joining the “million dollar housing club” – areas where multiple building permits have been issued for homes worth over $1 million.

In FY2007 seven Melbourne suburbs had at least five $1 million building permits issued. Traditionally millionaire building activity has been confined to the usual suspects such as Toorak, Brighton and Portsea – but lately these areas have been joined by Hawthorn, Kew, Flinders and Malvern.

Toorak still heads the list with 22 building permits of $1 million or more for building or renovating homes, followed closely by Brighton with 20 such permits. 

Building Commissioner, Tony Arnel, says: “Seven postcodes reporting five or more of the $1 million-plus permits is a strong indicator of confidence in Melbourne’s luxury home market. 

“It’s terrific that in just 12 months, Victoria’s property market has seen this list swell from four suburbs to seven.” 

The total number of permits with a value of $1 million-plus for new dwellings or alterations in Victoria reached 203 in FY2007, an increase of 39% on the previous twelve months. 

The highest-value single dwelling permit issued was $9.2 million. In FY2006, the most expensive home building permit was $5.7 million. 

Thousands of prime beachside properties in Sydney are at risk of landslip, according to an article in the Sydney Morning Herald.

It reports than over 17,000 homes on the northern beaches of Sydney have been declared at risk of landslip by Pittwater Council. This is double the number of properties identified in a previous assessment five years ago. 

Any property owner with such an assessment will be up for potentially thousands of dollars in fees if they seek to re-develop their properties.

The Sydney Coastal Councils Group is supporting the Pittwater move and has called on the State Government to conduct a state-wide study of the problem.

“Pittwater has been subject to a geotechnical risk management plan since the 1970s when a number of properties were involved in landslides,” the SMH reported.