Sydney’s thriving property market probably kept the Reserve Bank of Australia from lowering interest rates, according to a real estate network.
LJ Hooker chief executive Grant Harrod said today’s announcement to leave the historically low cash rate unchanged is not surprising.
“Auction clearance levels in Sydney remain near record levels and more often than not reaching prices higher than market expectations,’’ Mr Harrod said.
“We are continuing to see large numbers at open inspections and agents are receiving multiple offers, so the demand is still there and fuelled by already low rates.”
Mr Harrod has not ruled out further reductions but believes the RBA has time on its side to reflect on the impact of the February rate cut.
LJ Hooker national research manager Mathew Tiller said economic conditions had not changed significantly enough in the past month to warrant the RBA taking action now.
“With the east coast housing market continuing to show strength, the RBA today didn’t want to add any extra fuel to the fire,” Mr Tiller said.
“Concerns about unemployment seem to be easing – and this is also good news for home buyers and investors, because it is giving them added confidence and security.”
Mr Tiller said the possibility of future cuts to interest rates could depend on inflation statistics and balance of trade figures due in coming weeks.
“We would be very surprised if they didn’t cut soon, possibly May,” he said.
“The market is now pricing in two further cuts to 1.75 per cent by December.”