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Cash Rate Held at All-Time-Low of 1.5% After February RBA Board Meeting
At the first board meeting of 2017, Philip Lowe and the RBA board concluded that the official cash rate will remain on hold at 1.5%. In today’s blog, C&G examines what this could mean for the property market and Australia’s economy as a whole.
Maintaining a record low, Governor Philip Lowe announced this afternoon that the cash rate will remain on hold at 1.5%. The news came following the Reserve Bank of Australia’s first board meeting of 2017, after a two-month summer hiatus.
A result widely predicted by economists, the hold remains in line with the markedly low inflation rates at the close of 2016, tracking at just 1.5% for the whole year – the lowest annual inflation for 19 years. The steady strengthening of capital city property markets on the east coast further supported the rate hold, though a notable slowing of markets in Perth and Darwin were suggestive of a potential cut.
A subtle upward trend in mortgage rates of late wasn’t enough to convince the board of a rate reduction, either, with many lenders not expected to pass on any cut to home buyers at all. That said, the significantly low cost of debt is still creating substantial demand in owner-occupier and investment property purchases, after a pick-up in investor lending at the end of 2016.
Here in Melbourne, demand remains consistently high, with a steady start to the year in auction clearance rates in Bayside and the wider market. If you’re concerned about presenting your property for sale, rest assured that demand remains in favour of vendors, with capital city dwelling values up 10.7% compared with 7.4% a year ago.
Chisholm & Gamon is on hand to assist in navigating the complications of the property market following the cash rate hold today. Pop into one of our four Bayside offices or get in touch to discuss your property strategies for 2017, and how we can work market conditions to your advantage.