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No surprises from July cash rate decision

By Louise Morrin

The official cash rate will continue to work in borrowers' favour for at least another month, as the Reserve Bank of Australia (RBA) made its July announcement.

RBA governor Glenn Stevens explained that once again, conditions in the Australian economy simply weren't good enough to justify any changes to the cash rate. There has been some growth over the past year, but this still remains lower than the long-term average.

As a result, the cost of borrowing for property in Carlton will remain low, giving prospective buyers the incentive they need to enter the market. The low interest rate environment is already proving effective, the RBA noted, and there's every hope this will continue in the short term at least.

The Housing Industry Association (HIA) predicted that no change would be on the horizon at the start of the new financial year. It suggested that there will be plenty of interest in future decisions, which the HIA believes may see the rate being cut even further.

Chief economist Harley Dale said: "Regardless of whether the interest rate gun stays in the rack or not, the key is that super low borrowing costs are here to stay throughout 2015/16.

"That will help support housing activity at a time when there is scant evidence of strong momentum elsewhere in the domestic economy."

The HIA now believes the government should shift its focus towards taxation reforms and encouraging the construction of new housing. This would give more people the opportunity to buy Carlton property, while also stimulating the economy as a whole.

It's no longer enough to simply rely on interest rates to do all the work, Mr Dale stressed, as emphasis now needs to be placed on other methods of supporting the Australian economy. With home building as strong as it is at the moment, it makes sense to focus on this as a core area of concern.

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