Cash rate announcement to bring joy to buyers
February 4, 2015 / Written by Rich Harvey
It's not quite hell freezing over, but the Reserve Bank of Australia (RBA) has a nice surprise awaiting anyone looking at Australian investment property: a lowered cash rate.
For the first time in 18 months, the RBA has moved this figure down by 25 basis points, to 2.25 per cent. This is a big move, and one that will probably have some significant impacts on everyone after that dream Australian property investment. So what exactly does the big move mean?
A shot in the arm
In the February 3 rate announcement, RBA Governor Glenn Stevens noted that the Australian dollar had declined, the Consumer Price Index was at a low and commodity prices have declined, all of which needed some measure of action. In response, the Reserve Bank board deemed it appropriate to cut the cash rate, as a stimulus.
In a media release responding to the RBA announcement, the Housing Industry Association called the rate cut a well-timed boost to an economy that was experiencing sluggish inflation.
"The RBA Board have today cut rates to provide an opportunity for the economy to grow at a stronger rate than might otherwise have occurred," said HIA Chief Economist Harley Dale in the February 3 statement.
This could see growth continue in many areas, enabling house hunters to find great real estate opportunities with the help of a buyers agent.
A specific area of the economy expected to benefit from the rate cut is building construction, according to Mr Dale.
"A further 'touch down' to interest rates will help maintain very healthy levels of new home building while hopefully broadening the base of Australia's economic growth," he said. However, he expressed concern that any macro-prudential measures could hamper confidence in the wider real estate market.
Overall, this looks to be great news for investors in Australian property. With home prices still one the rise in Sydney and other opportunities popping up in Brisbane, a lower cash rate could help you secure an even better home loan.
Of course, once the finance is sorted you'll need expert advice to choose the right property for your needs. The RBA notes that lending to investors is still on the up, showing more competition among buyers with the same interests. Contact a buyers' agent to get the edge on the competition and purchase some great positive cashflow property, and keep 2015 going strong as another thriving year in real estate.