Reserve Bank of Australia Announces Cash Rate Hold
At the final RBA board meeting of the year, Governor Philip Lowe announced that the cash rate would remain on hold at 1.5%. Today, C&G explains what this means for the property market and the local and wider economies.
A result widely expected by analysts, the Reserve Bank of Australia announced today that the cash rate would remain on hold at an all-time low of 1.5%.
The reason for the rate hold is largely attributed to the festive period, amidst hopes that consumer spending will be boosted by Christmas shopping and end-of-year indulgences. The next board meeting will not fall until February 7, giving the board some breathing space to react accordingly to a number of potential game changers. The upcoming release of economy growth data, along with the inauguration of Donald Trump in the US and the notable rise in commodity prices may create an environment that lends itself to a further cut or a rate hike.
A disparity across the country’s housing markets makes predicting how future rate changes may affect demand a complex question. Both in Sydney and Melbourne, housing values and market competition have remained strong, while other (often more outer-suburban and regional) areas have experienced a drop in housing prices and demand. Leading banks yesterday announced a further tightening on investor home loan rates ahead, adding further motivation for owner occupier property purchasers to acquire assets swiftly.
Despite widespread uncertainty and an unclear start to 2017, the RBA board is confident that the December rate hold is consistent with sustainable economic growth and the ability to bring inflation to the target of 2–3%. Housing markets are holding their own in terms of demand, and a rate hold will neither fuel nor upset the stability that’s been achieved throughout the RBA’s easing tactics of 2016.
If you’ve been waiting to sell or thinking about a move in 2017, Chisholm and Gamon can help you navigate the Bayside real estate market with ease. Our friendly team of professionals will employ the right strategies to obtain the very best result possible for your property sale.