A leading real estate network has said the Reserve Bank of Australia’s decision to keep a “wait and see” approach to interest rates is good news in the lead up to the busy spring selling season.
LJ Hooker chief executive Grant Harrod said the recent RBA announcement to leave the cash rate unchanged at a historic 2.5 per cent will keep mortgage repayments affordable and investor demand strong.
“It’s a finely balanced domestic economy that has made the RBA reluctant to shift its current ‘neutral’ monetary policy position,” he said.
“It now looks likely interest rates will remain on hold for the rest of the year, barring any unforeseen events, and it should boost consumer confidence as we approach spring.
“There is some speculation rates could be dropped even further if the Australian dollar remains high,” he added.
It has been a strong winter market with RP Data showing continued price growth in Sydney, Melbourne and Brisbane, despite forecasts it would slow.
Mr Harrod believes there is little reason this should not continue, with historic low mortgage rates, increased demand and auction clearance rates all showing continued demand for property.
He does not believe rising house prices will force the RBA to take any action upwards while inflation remains contained at two to three per cent and unemployment remains under six per cent.
“Price growth has helped boost construction activity and in turn economic growth in general, which is essential as we adjust to the fall in mining investment,” Mr Harrod said.
“Strong prices could motivate people to list in spring, which is essential because this shortfall of stock has hampered the market in winter despite it being stronger than expected.”