Real Estate Markets Forge Ahead as Cash Rate Stays On Hold at 2.5% As the Federal Election draws near, the Reserve Bank has decided today to wait until next month to decide if it is necessary to implement the ninth reduction since 2011 and lower the official rate, currently on hold at 2.5%. There have been concerns leading up to today’s decision with the downtrend of the AUD stalling as well as GDP growth forecast to grow only by 2.25% in 2013, down from expectations of 3.00% at the beginning of the year. Additionally with growing unemployment and slow wages growth there are several signs that another rate cut may be due in the near future. While the RBA has deemed these conditions not dire enough to warrant a rate cut just yet, their current actions do not reflect a change in the long term outlook. The statement of the RBA released two weeks ago highlights their position that a further rate cut may not be far away - “with growth expected to remain below trend for longer and inflation to remain within the target even with the effects of a lower exchange rate, members concluded that a lower cash rate would better contribute to achieving sustainable growth in demand consistent with the inflation target.” Earlier rate cuts have encouraged increased buyer confidence, translating to higher clearance rates and fewer days on market for vendors in localities across the country. While a further rate cut might see another influx of buyers to the real estate market, keeping the rates on hold at this historic low is unlikely to deter buyers currently competing for property. Sourced from realestateview.au
Posted on: Tue, 03 Sep 2013 06:43:06 +0000
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