Despite a raft of less than impressive economic data, the Reserve Bank of Australia has decided to keep the official cash rate on hold.
At its monthly Board meeting earlier today, the RBA decided it was prudent to keep the cash rate at 3.25 per cent – slightly above the historic low of three per cent.
LJ Hooker deputy chairman Janusz Hooker believes the RBA’s decision not to drop interest rates this month is a blow to those selling their house at the end of the year.
“A cut is now likely in December it will be too late for the second half of the spring property market,” warned Mr Hooker.
“The market is being dragged down by a lack of consumer confidence, so this is a missed opportunity to give housing a little kick along when it is needed.
“It may take six to 12 months for rate moves to impact the housing market but it doesn’t take as long to influence a buyer’s mind-set.’’
A reduction of 25 bpts would give a cash rate of three per cent and equal a historic low, seen only after the Global Financial Crisis.
Mr Hooker believes there is still leverage for the RBA to drop rates further next year to spur activity in the housing sector. Australia’s cash rate is higher than NZ at 2.5 per cent, the USA at 0.25 per cent and the UK at 0.50 per cent.