I don't think it surprised anybody when the Reserve Bank of Australia elected to keep September interest rates steady at 4.75 per cent last week. With heightened concerns for the global economy and continuing low consumer sentiment, an interest rate rise certainly seemed unlikely, and at this stage may not even be on the cards for another few months at least.
Setting interest rates for September saw the Reserve Bank continue to monitor "very unsettled" conditions in global financial markets, which according to Reserve Bank Governor Glenn Stevens are "reducing confidence and may result in more cautious behaviour by firms and households in major countries".
Meanwhile, on the domestic front, increasing measures of underlying inflation remain an issue for the Board. According to Governor Stevens, "while they have, to date, remained consistent with the 2 – 3 per cent target on a year-ended basis, the Board remains concerned about the medium-term outlook for inflation."
In terms of what to expect regarding interest rate movements over the coming months, Governor Stevens indicated that the Board would continue to monitor how inflation is contained by softer domestic and international conditions, as well as the outlook for growth. However, expectations are very different from where we were even just a few months ago when it was widely thought that an interest rate rise was imminent.
Instead, rates have now been kept on hold for the longest period in five years with some economists even entertaining the possibility of a cut over the next few months.
The RBA's decision marks a positive start for real estate in spring – traditionally a very busy season for residential property with the warmer weather often reinvigorating those would-be buyers who held off from making a purchase during winter. The expectation that rates will continue to be held at 4.75 per cent for a little while at least should provide some added motivation for buyers to have a look at what's on the market and take advantage of generally optimistic conditions – provided they are in the financial position to do so and have sought the appropriate financial advice.
And with market activity somewhat subdued of late, those looking to make a property purchase may well have added buying power on their side.
For those who would like further advice regarding the sale or purchase of property this spring, please don't hesitate to drop into any one of the Century 21 real estate agents across Australia to talk to one of our property experts.