C&G’s Guide to the February RBA Announcement

On Tuesday, the Reserve Bank of Australia held its monthly board meeting to decide the fate of the all-time-low cash rate. Governor Philip Lowe announced that the rate would be held at 1.5% for the 30th consecutive month – so C&G unpack what this means for the property market and wider economy in today’s insightful blog.

For the 30th consecutive month, the Reserve Bank of Australia has held the cash rate at 1.5%. Having not met since December, the board’s decision was widely anticipated by economists, with the majority correctly predicting the hold. The board’s next move, however, is very much up for discussion. Just weeks ago, pundits expected the next move to be up, but now over 60% believe a cut could be delivered in the coming months.

Despite a softening in the economy, experts say it’s likely not weak enough to signal a cut just yet. In the property market, dwelling values were recently recorded to have dropped 5.6% in the 12 months to January 31 of this year, proving that the real estate downturn has indeed begun to gain momentum.

Finance experts have also cited out-of-cycle mortgage rate hikes from lenders in response to the sustained rise in wholesale funding costs, putting pressure on the RBA’s outlook. Consistently low inflation has also been a factor for many months, and is said to have played a role in the hold decision once again.

With the pending federal election, developments in the Royal Commission into Banking, outcome of global trade issues like Brexit, and the property market off-season, a future rate cut seems more likely than it has for some time, although only time will tell what the future holds.

Despite talk of the property downturn, many areas are still seeing consistently high results. One bedroom apartments are performing exceptionally well amid first home buyer interest, and the growing population signals more demand is to come for both rental and sales properties.

Chisholm & Gamon’s experienced team welcome you to get in touch about your real estate goals for 2019. Whether you’re buying or selling, we’ll work through your plans and discuss a strategy that’s right for you in the current climate.

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