On Your Marks, Get Set…Oh No, Wait. They’re On Hold Again: The RBA Leaves Cash Rate Unchanged at 2%
The Reserve Bank of Australia’s monthly board meeting has generated an outcome widely anticipated: the cash rate will once again remain on hold at an all-time-low of 2%. Today, C&G explore the implications of this stasis on both the economy as a whole, and the property market.
The RBA’s predictable approach to managing the economy continues with yet another month of rate hold – keeping the cash rate at 2% for the sixth consecutive month. Their decision was widely predicted by industry experts, with Glenn Stevens’ release statement almost mirroring that of the September announcement.
The notable change was Stevens’ head nod to the regulatory measures of the housing market. The RBA has responded to signs that movement in the residential market may be starting to cool off, declaring that “regulatory measures are helping to contain risks that may arise from the housing market”.
With the recent tightening of lending growth by APRA and the encouragement of owner-occupier property purchases, the risks attached to strong home price growth through excessive demand are being controlled – with particular attention being paid to the east coast. The fall in clearance rates in both Sydney and Melbourne, however - accompanied with the rise in the number of homes available - leaves buyers with a wider range of options and puts less pressure on their decision making.
The board notes that current economic data continues to hint at “moderate expansion” in the economy, but that further changes to the cash rate would need to be assessed against forthcoming data over the period. This suggests that monetary policy easing could still occur, with the coming months directing the board to their decision. Should the current situation “effectively foster sustainable growth consistent with the target”, no further changes will be made - though if there is room for improvement, a further rate cut would not be unexpected. Economists have long communicated their anticipation of a further cut before the end of the year, leaving a watch-and-wait approach to be adopted by the industry and the public.
Planning to purchase property – as an owner-occupier or as an investor? Governor Stevens maintained that the cash rate and local property market conditions will likely affect the right strategy for you. APRA’s new restrictions change the rates available to both investors and owner-occupiers, so speak with your broker about the best way to work this situation to your advantage.
If you’re in search of assistance with your sale or purchase in the Bayside area, Chisholm and Gamon are on hand to help. With experts in Elwood, St Kilda, Black Rock, Brighton, Elsternwick, Mount Martha (and everything in between!), our team will ensure you receive the best possible local real estate experience