Tuesday's decision by the Reserve Bank to leave the current interest rate at 3.00% will continue to provide relief to those invested in the property market, and I am confident that the low current rate will still act as a motivator for those considering returning to the market. In a nutshell, even though rates weren't cut this week, I believe that the low nature of the cash rate is still going to benefit the real estate market and industry.
The last rate reduction left the cash rate at it's lowest since March 1960 when the average rate was 2.99%, and it can't be disputed that it's had a big impact on the market. Although the banks have been criticized for not passing on the full rate cuts in these times of economic stress, about 360 of those basis points have been passed on to consumers. This acts as an incentive for those considering making their move into property, whether for the first time or not, and for those already invested the savings and relief it has provided cannot be denied. At Century 21 we have certainly seen buyers and sellers who have recognised that these factors make it a good time to be in the market."
Although the government's stimulus by way of the first home buyer initiatives is possibly drawing to a close, this group is still currently one of the biggest winners in the housing market. With the low interest rate and the increased grants available, it is still the first time buyers who are responsible for much of the current activity in the market. I am anticipating that the stable low rate will send a signal to previously hesitant first home buyers to take the plunge, and I am certain that this week's rate decision will continue to bolster confidence in the market.