It’s the first Tuesday of the month, and that means that the members of the Reserve Bank of Australia have met over lunch to discuss the official interest rates. Today (and as predicted by the majority of Australian economists) the members have decided to keep rates on hold at a record low of 2%, which continues to be good news for all mortgage holders.
The central bank is also expected to increase its efforts to talk-down the local currency in order to further assist with the rebalancing of the real economy.
Although proposed changes to negative gearing (once considered the sacred cow of federal government policies) have been floated by both major parties, REIV President Geoff White believes the proposals lack insight, with renters to be hardest hit.
“If investors withdrew from the established home market in this vital property belt, it would cause a significant shortage in rental supply and impact heavily on the Government of the day,” White said.
Property Market improves due to low interest Rates
The property market Australia wide on the back of consistently low interest rates continues to improve, with Hobart the best performer where prices rose 2.9%, followed by Adelaide and Brisbane. Prices in Melbourne and Darwin rose 0.3% and 0.4% respectively in February, while Perth prices fell 1.1%, according to Corelogic RP Data’s Head of Research Tim Lawless.
“The trend in home value growth is showing signs of increasing in those markets that have previously underperformed. These include Brisbane, Adelaide, Hobart and Canberra,” Mr Lawless said.
“Affordability constraints aren’t as apparent in these cities and rental yields haven’t been compressed to the same extent as what they have in Melbourne or Sydney.”
Whilst the Sydney property market continues to soften slightly, Sydney property agent Starr Partners’ chief executive Doug Driscoll believes that some have been too quick to write it off.
“There’s plenty of life in the old girl yet,” Mr Driscoll said.
“If you look at the 10 to 15 year average, Sydney is still well above that average.”
While a boom is not likely this year, with experts expecting only single digit growth rates, but with interest rates set to remain low for the forseeable future, the Sydney market will remain robust, rising 0.5 per cent in February, the second rise in 2016.
As always, if this is your year to buy, sell or invest, remember as your mortgage broker we are here to help with any questions.