The Reserve Bank of Australia’s decision to keep interest rates at historic lows today is unsurprising as it tries to balances the economy, according to leading real estate network LJ Hooker.
LJ Hooker’s Chief Executive Officer, Grant Harrod, said the start of a new financial year, combined with the traditionally quieter winter market, made any immediate changes unlikely.
“The continued stability of rates will give buyers extra confidence, even with speculation an increase will eventually come,’’ he said.
“We have seen property price growth soften as the market heads into winter but, even still, demand is strong as seen in the volume of sales and auction clearance rates around Australia’s various markets.’’
LJ Hooker National Research Manager Mathew Tiller said local inflation remains within its target band of two to three percent while unemployment levels remain stable at 5.8% despite concerns about the retail and mining sectors.
International economies, however, could start to have an impact here and possibly lead to even lower mortgages.
“In the US and EU, rates are set at close to zero and are not expected to move till mid-2015, while the risk of deflation in Europe has seen the European Central Bank introduce negative interest rates for bank deposits,” Mr Tiller said.
“Major lenders here may look to tap into this cheap source of debt.”
Mr Harrod said the driver behind the ongoing decision to keep interest rates stable at its historic low of 2.5% is the consistent balance of the economy in the wake of the offset in mining and resources investment.
“The ongoing lack of housing stock is continuing to keep the market buoyant and demand remains in place across all price points,” Mr Harrod said.
“Demand is particularly strong from investors looking for off-the-plan apartments in major CBD locations.”