Still Sitting: C&G’s Guide to April’s Cash Rate Announcement

It’s the eighth month in a row that the Reserve Bank of Australia have kept the national cash rate on hold at 1.5 per cent, so today’s Monetary Policy Announcement for April came as no surprise. Here, C&G explore how the repeat rate-hold could affect Australian property markets and the wider global economy.

The Reserve Bank of Australia Governor, Dr Philip Lowe, announced the hold shortly after 2.30pm – but nobody was sitting on the edge of their seats in anticipation of the decision. ‘Interest rates have increased in the United States and there is no longer an expectation of additional monetary easing in other major economies,’ Lowe said in his Monetary Policy Decision media release, ‘financial markets have been functioning effectively.’ Indeed, it seems the RBA is employing a ‘watch and wait’ strategy when it comes to the Australian markets also.

With property markets hot in Sydney and Melbourne, an additional rate cut could add fuel to the fire. While this might sound good for cooler markets like Perth, cheaper lending could bring competition to boiling point – possibly causing demand to exceed supply. Potential rate cuts - if coupled with recent stamp duty cuts for first home buyers - could inspire further reports of a so-called property market ‘bubble,’ - but this doesn’t appear a major concern for purchasers still focused on entering the market. In saying this, APRA’s instructions to banks to tighten investor lending has held back some supply during the high-demand season. Now with stamp duty cuts ramping up home-buyer demand, our vendors will have no shortage of serious buyers from both categories. 

There are a number of other national factors which required consideration from the nation’s monetary policy decision-makers today. Aside from staying in tune with the US Federal Reserve, a very weak Australian jobs report, the devastation of Cyclone Debbie and the end of the mining investment boom – the board’s decision to hold makes sense.

With the cash rate currently at an all-time low, C&G advises first home buyers to take a future rate hike into consideration when calculating their budget. While there may be some uncertainty ahead – the RBA cannot sit on the fence forever – we are very fortunate to be part of one of the most in-demand property markets in Australia. Bayside property growth consistently yields great results for our vendors and landlords! 

To learn more about selling or leasing your property in the current climate, make an appointment with Chisholm & Gamon’s friendly team of real estate professionals today. 

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