It is feared today's massive interest rate cut still won't be the silver bullet needed to kick start Australia's ailing property market.
The Reserve Bank has slashed the official cash rate by 100 basis points, or one per cent, the biggest drop in 16 years.
The four big banks are now passing on most of the savings, cutting their standard variable home loans by 0.8 per cent.
Aaron Gadiel from the Urban Task Force says that still won't encourage enough investors to build especially in New South Wales.
"There's not enough money to go around and lenders aren't renewing their loans to developers."
"If that isn't addressed by local and state governments there will be a massive loss in development projects pending and that could leave a real hole in housing and job numbers."
However, Australian stocks did rise more than one per cent following the RBA’s surprising move.
At 1453 AEDT the benchmark S&P/ASX200 was up 73.9 points, or 1.63 per cent at 4614.3 and the broader All Ordinaries was up 46.6 points, or 1.03 per cent, to 4591.3.
The move by the central bank was larger than the 50 basis point fall economists had predicted.
The preceding 16 moves (three cuts, 12 hikes, then another cut last month) were all 25 basis points, so the RBA's move is a clear signal that it believes the balance of risks for the economy have shifted dramatically.
The most recent phase of the global financial crisis has been the obvious catalyst.
"The recent deterioration in prospects for global growth, together with much more difficult market conditions even for creditworthy borrowers, now present the risk that demand and output could be significantly weaker than earlier expected," the RBA said in a statement issued by its governor, Glenn Stevens.
The RBA stuck with its view that the September quarter figures will show the annual inflation rate is around five per cent, from 4.5 per cent over the year to June.
However the rising risk of unexpectedly weak economic growth has tilted the balance of probabilities to the downside.
"Should that occur, inflation would most likely fall faster than earlier forecast," the RBA said.
Looking ahead, the RBA said that given rising funding costs it had decided that "on this occasion, an unusually large movement in the cash rate was appropriate in order to bring about a significant reduction in costs to borrowers".
However it warned borrowers not to expect more of the same.
"The Board does not, however, regard that movement as establishing a pattern for future decisions," the RBA said.
The futures market has responded by pricing in no further change in the cash rate next month.
For December the market has fully factored in a move to 5.75 per cent and about a 50-50 chance of a bigger move to 5.50 per cent.
The Reserve Bank's full statement
At its meeting today, the board decided to lower the cash rate by 100 basis points to 6.0 per cent, effective 8 October 2008.
Conditions in international financial markets took a significant turn for the worse in September.
Large-scale financial failures in several major countries were accompanied by serious dislocation in interbank markets and heightened instability in other markets, including sharp falls in share prices.
Official actions in a number of countries have been aimed at restoring stability, by adding to short-term liquidity and laying a foundation for longer-term recovery in the health of balance sheets.
Nonetheless, financing is likely to be difficult around the world for some time ahead. This is also affecting Australia, albeit by less than in many other countries, given the relative strength of the local banking system.
Economic activity in the major countries is also weakening, and evidence is accumulating of a significant moderation in growth in Australia's trading partners in Asia.
The expansionary effects of the recent surge in Australia's terms of trade are still coming through, but some decline in the terms of trade now looks likely over the coming year, with many commodity prices having declined from their peaks. This, combined with the likelihood of below-trend growth in the global economy, suggests that global inflation will moderate in 2009.
Thus far, the overall path of economic activity in Australia appears to have been close to what the board had expected, with the needed moderation in demand occurring.
The next CPI is likely to show an increase of around 5 per cent over the four quarters to September, but the Bank remains of the view that inflation will start to decline in 2009.
The recent deterioration in prospects for global growth, together with much more difficult market conditions even for creditworthy borrowers, now present the risk that demand and output could be significantly weaker than earlier expected. Should that occur, inflation would most likely fall faster than earlier forecast.
Given that background, the board judged that a material change to the balance of risks surrounding the outlook had occurred, requiring a significantly less restrictive stance of monetary policy. The board also took careful note of movements in funding costs in wholesale markets.
Having weighed these considerations, the board decided that, on this occasion, an unusually large movement in the cash rate was appropriate in order to bring about a significant reduction in costs to borrowers.
The board does not, however, regard that movement as establishing a pattern for future decisions.
The board will continue to assess prospects for demand and inflation over the period ahead, and set monetary policy as needed to bring inflation back to the two to three per cent target over time.