C&G on RBA’s December Announcement: Rates on Ho, Ho, Hold!
Governor Glenn Stevens may not have donned a Kris Kringle hat and snowy white beard, but householders and retailers could well have mistaken him for Santa during his December RBA cash rate announcement. His gift for naughty and nice? Another reprieve from an increase to the national cash rate, as it remains at 2.50%. On ho, ho, hold indeed! Here’s C&G’s jolly final wrap-up on the RBA’s final announcement for 2014.
With the critical holiday retail season now upon us, few industry pundits considered that any hike in cash rates for December was likely. With Treasurer Joe Hockey encouraging all Australians to get out there and spend, there is little appetite to keep consumers from splurging and supporting the retail sector this Christmas. ME Bank General Manager John Caelli noted that ‘the RBA is unconcerned about inflation, and both unemployment and the dollar remains high. The next cash rate change will likely be upwards and occur in the second quarter of 2015.’
What does this continued stasis mean for the property market? C&G’s clientele of vendors and buyers remain enthusiastic to both buy and sell before the year is out – we fully expect to continue negotiating on behalf of our clients until Christmas Eve and thoughout the holiday season. This is a time of year when motivation to make financial decisions is high (New Year’s resolution for that fresh home or investment, anyone?!?), and with continuing strong clearance rates at auction – we don’t perceive any slowdown in buyer confidence in early 2015. Finder.com.au’s Michelle Hutchison reports that all 37 leading experts on their panel predict that property prices will continue rising next year.
If you are a first home buyer with the ability to purchase a property, now is the time to do so – before prices in high net worth areas continue to rise. Unfortunately, first home buyers’ participation rates in property transaction are at record lows – with ABS Housing Figures showing that the proportion of first home buyers was 11.98% of all loans financed in September 2014 – just 6,339 loans in total. Of course, there are an array of reasons behind this slow-down in first home owners purchasing – but if you’re able to buy and are perhaps dilly-dallying with your decision making on the suburb in which to buy and the potential compromises you might need to make – nip that indecision in the bud as 2014 closes. Happy hunting!