Although no one really believed the Reserve Bank of Australia (RBA) would raise the cash rate in August, there was some concern that it could potentially take that road in order to slow down home value growth. Rising house prices have been a hot topic lately, and putting up interest rates would have been one way of pushing growth down.
However, anyone considering buying property in Carlton and St George will be pleased to hear the RBA has taken a different tack. It has left the cash rate at 2 per cent, which will continue to make it simpler for many to get a hold of the property they've had their eye on.
According to Tim Lawless, head of research at CoreLogic RP Data, rising home values would have played a significant part in the RBA board's discussions this month, particularly when it comes to Sydney. After all, the Harbour City was one of the best performing capitals over the month of July according to the organisation's own data, seeing a 3.3 per cent rise over the month.
Much of this is expected to be due to investor activity. Australians are seeing big value gains in Sydney, and wish to capitalise on this while the time is still ripe. Unfortunately, this also tends to have an upward effect on property prices.
In a 4 August statement, Mr Lawless noted that while regulators like the RBA were hoping to see price growth slow down, they were unlikely to use interest rates as a way to do so. Rather, the RBA would rely on the Australian Prudential Regulation Authority's recent actions aimed at curbing investor activity.
What this means for anyone purchasing real estate in St. George is that despite the RBA's uncertainty about house prices, interest rates are likely to stay at their current all-time low values for the near future at least. This should be a boon for Sydney home buyers in the months going forward.