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C&G’s Guide to the November Cash Rate Announcement
The RBA Still Hasn’t Found What It’s Looking For: C&G’s Guide to the November Cash Rate Announcement
It has run, it has crawled, but the RBA still hasn’t found the conditions it’s looking for to justify a cash rate increase. Today, C&G discuss what the interest rate stasis means for the property market here in Melbourne, and Australia’s economy as a whole.
Melbourne Cup Day was about more than just racing for the Reserve Bank of Australia. Being the first day of November, the RBA must deliver a decision about the fate of the national cash rate – the result widely anticipated by experts. In his debut board meeting, the new Governor Philip Lowe announced the decision to keep the cash rate on hold at its all-time-low of 1.5%. A hat tip to his predecessor Glenn Stevens, Lowe’s optimism about the future of Australia’s economy informed a ‘wait and see’ approach to November’s cash rate announcement, resulting in the board’s decision to keep rates as they were.
The hot property markets in Melbourne and Sydney were once again the focus of many experts predicting rate stasis. Despite a cut looking probable for November earlier in the year, the idea of a further national cash rate reduction brought with it concerns over an increase in competition within the market. Governor Lowe’s ‘medium-term’ approach resulted in a decision to hold, in the name of controlling the property markets and managing buyer demand. The board are understood to be accepting of lower-than-desired inflation, which sits currently at 1.3 after a slight rise last week.
Supporting evidence in the case for rate stasis was the recorded 80% clearance rate for auctions across Melbourne and Sydney in October, and a 0.5% increase in dwelling prices delivered on Tuesday via CoreLogic. As we move into 2017, a further rate cut becomes more likely. Despite continued growth in the wider property market and hotly-contested inner urban locales, there has been a drop in mortgage approvals, signalling a potential cooling-off in some sectors of the Australian market.
Local real estate market conditions are certainly worth factoring into your own property investment plans, and Chisholm and Gamon are always on hand to assist you with the timing and strategy of your property purchase or sale. Just visit our friendly teams in one of our four Bayside offices.