After maintaining a high interest rate policy over the past 2 years, the Reserve Bank of Australia (RBA) announced their second successive 0.25% rate reduction today.
This will be very welcomed news to all Australian property owners, occupiers and incvestors alike, and means we have moved away from the recent past of threats of interest rate rises and moved to a more sensible interest rate level.
Citing inflation stability and softening world economies, the RBA is wanting to be seen as being ahead of the curve in case the global outlook does indeed worsen. Truth is that Australian interest rates have been higher than they needed to be for the past 18 months and that has had a stifling effect on the Australian economy and property market.
The reduction will go a long way to restore confidence in buyers who have been sitting on the sidelines throughout this period with a wait and see approach. We can now expect an increase in buyer activity once the banks begin to pass on this latest reduction in rates.
With demand stil driven by significant incoming migration and supply of new housing remaining surpressed, we can expect this good news to be the catalyst for a lift in market confidence and a resultant positive result for Australian property through 2012.
