The Reserve Bank of Australia (RBA) has met today, and their decision has seen the board keep interest rates on hold at a record low-level of 1.5% for the sixth consecutive meeting.
This was no surprise to experts; all 24 economists polled by Bloomberg predicted the decision, one they believe is intended to encourage sustainable growth in the economy whilst achieving the inflation target over time.
This sentiment is shared by the Reserve Bank governor Philip Lowe, who in February spoke three times about keeping rates on hold to balance the need to boost inflation while maintaining financial stability.
Low Interest Rates drive Housing gains
The decision to keep interest rates on hold comes in light of another strong month of gains across the Australian housing market. Capital city home values climbed 1.4% in February, taking the annual growth rate to 11.7%, the best since the 12 months to June 2010.
According to preliminary data released by CoreLogic, a national clearance rate of 77.8% was recorded last week, with Sydney and Melbourne both documenting preliminary clearance rates of over 80%. The median dwelling price in Sydney and Melbourne rose by 2.6% and 1.5% respectively in February, taking the gains over the past 12 months to 18.4% and 13.1% respectively.
On top of that, experts are saying that Australia is now in an ‘economical rebound’, moving back to positive territory in the last three months of 2016. In fact, the Australian economy ranked 13th in the world in 2016 when measured in US dollars, according to International Monetary Fund estimates.
Regional economist at SGS Economics and Planning Terry Rawnsley says that the relative size and success of Australia’s regional economies is underappreciated. “Being Australians we sometimes downplay how hard we work, how smart we work, how much money we generate for ourselves,” he said.
The continued strength in clearance rates and strong prices, coupled with a resurgent economy and low interest rates suggests that there are still plenty of great opportunities out there for those looking to invest. As always, contact your mortgage broker with any questions you may have.