RBA Holds Cash Rates Steady

By Alison Orman on Oct 04 2016


Today the RBA's decision was made by the new RBA Governor Dr Philip Lowe, following the retirement of Glenn Stevens in September. Mostly it was predicted the interest rate would be placed on hold after the comments he made to the press regarding the lack of effectiveness of further rate cuts in stimulating growth.

Today the RBA's decision was made by the new RBA Governor Dr Philip Lowe, following the retirement of Glenn Stevens in September. Mostly it was predicted the interest rate would be placed on hold after the comments he made to the press regarding the lack of effectiveness of further rate cuts in stimulating growth.

A 25 basis point rate cut in August saw the official cash rate fall to all time low. However it did not have the effect of reducing the level of the Australian dollar against other currencies as was intended. Economic data around inflation, employment and GDP growth has been positive of late, a lower Aus dollar would be much more beneficial at stimulating a more productive economy.

With the official cash rate at unprecedented lows and interest rates more competitive than ever, conditions are great for Australian property buyers right now.

The RBA has maintained its wait and see approach and kept the cash rate at the record low of 1.50%

Effect On Property Markets

The two cash rate cuts in both May and August have continued to support buyer demand across most regions. This is evident in the very strong performance for austion markets with clearance rates consistently above 75% in both major capital cities, Sydney and Melbourne.

It is hoped that the slow down in price growth will prompt prospective home owners to list their property over the coming spring and summer period.

Key Indicators

Capital city home values rose 1.0% in September and 7.1% over the past year.

Over the past 3 months Melbourne home values have recorded the strongest growth at 5.0% followed by Canberra (4.5%), Sydney (3.5%) and Adelaide (2.6%).
- New listings in capital city markets are now -3.3% lower compared to this time last year.
- The unemployment rate tightened by 0.1pts to 5.6% in August.
- Australia's population grew at 1.4% over the year to March 2016. This was led by Vic (1.9%), NSW (1.4%), - ACT (1.3%) and Qld (1.3%).
- Australia's GDP increased by 0.5% in the June quarter, taking growth to 3.3% over the past year.
- The Australian dollar fluctuated between US$0.74 and US$0.77 over the past month.

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