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C&G’s Guide to the October RBA Announcement
The Reserve Bank of Australia has held the official cash rate at 1.5% for another month. While the cash rate remains the same, the RBA’s decision offers insight into Australia’s economy and property market. In our latest blog, C&G discusses the latest RBA verdict.
Earlier this week, Reserve Bank Governor, Philip Lowe announced that low household spending and economic uncertainty were significant factors in the board’s decision to hold the interest rate at an all-time low. Increasing unemployment rates and low inflation will need to ‘gradually improve’ before the board can comfortably lift rates. With unemployment expected to reduce slowly, the RBA is not expecting wage growth or inflation to move too quickly either. ‘Wage growth remains low, although it has picked up a little,’ Lowe confirmed on Tuesday. He also noted that while ‘improvement in the economy should see further lift in wage growth over time, this is likely to be a gradual process.’
With tighter credit conditions revealed to be another potential impact, real estate forecasters reassure that property trends in Melbourne remain steady, thanks to robust uptake of owner-occupier loans. With no evidence that big banks will increase key variable mortgage rates, Lowe confirmed, ‘the average mortgage rate is still lower than a year ago’. Economists predict property prices to correct across capital cities by 2021, making an attractive market for those wishing to get into the market.
With the last rate cut in August 2016, the consecutive 26-month rate hold has divided Australian economists on whether the next move will come in 2019 or 2020.
As for the Melbourne real estate market, vendors can still expect good levels of demand well into the next year, with finance for owner occupiers still readily available. At Chisholm & Gamon, we are experiencing terrific auction action, with Spring set to be a strong season. If you’re looking to buy or sell, the Chisholm & Gamon team remains on hand to assist with your property strategy.