Industry professionals say there is no surprise that the Reserve Bank decided to leave the official cash rate unchanged at 2.0 per cent for the seventh consecutive month.
LJ Hooker chief executive Grant Harrod applauded yesterday’s announcement saying it will help boost the economy and encourage further retail Christmas spending.
“The one thing that deters or concerns people purchasing property either as an investor or an owner-occupier is when rates are moving around,” Mr Harrod said.
“Keeping rates stable will bring certainty and security to the household budget over the holiday period and allow people to set their retail spending knowing that their mortgage repayments won’t change over the next couple of months.
“And more importantly the rates are still at historic lows.”
Mortgage Choice chief executive John Flavell said a better than expected consumer result combined with easing property prices is what ultimately drove the board’s decision to keep the cash rate unchanged.
This was backed up by analysis from CoreLogic RP Data which revealed dwelling values fell across five of the eight capital cities last month, taking the combined capitals index 1.5 per cent lower.
Melbourne recorded the biggest drop across the capital cities, with values falling 3.5 per cent over November, while in Sydney property prices fell 1.4 per cent over the month.
“This data makes it clear that Australia’s two hottest property markets have officially started to cool,” Mr Flavell said.
Mr Flavell noted that while the RBA decided to finish the calendar year with the official cash rate sitting at 2 per cent, it “does not mean that rates will continue to sit at this low level forever”.
“In fact, some economists are now predicting that we could see a cash rate rise in the not-too-distant future. So, for those thinking of buying property in the New Year, now is a really good time to start looking,” he added.
However, Housing Industry Association chief economist Harley Dale said if there is to be any change to the cash rate in 2016 it will be a further reduction.
“That is the appropriate message for now given the uncertainty around future new home construction activity in 2016-17 and beyond,” Mr Dale said.
“Higher variable mortgage rates and a broader reach for investor credit rationing than required is hitting at the very time when the new residential construction cycle is at or close to a peak.
“That is a risk for the broader Australian economy.”
[Related: RBA makes call on cash rate]