Some sense of normality might be returning to Australian monetary policy as we saw the Reserve Bank decide to leave Australian interest rates unchanged for the second consecutive month.
This follows unwelcomed 0.25% rises in November 06 and February and March this year. We had also seen the banks sneak in two small rises of their own of 0.2% each which was blamed on the higher cost of borrowing as a result of the global credit crunch fallout from the US Sub Prime Market.
The Reserve had stated that it was trying to keep inflation in check, which had hit the upper end of the range as a result of higher inflationary impact of housing and transport costs.
Even though the March 08 inflation numbers came in higher than December 07, the RBA has at least taken a cautionary stance which seems more logical than the recent increases, as it waits to see the effect of rate rises and global slow down in naturally reducing the inflation growth rate.
After the February rate rise, the Australian property market slowed considerably due to nervousness of further rises, and this second month of no change will be welcome news for all of those seeking a home.
Unlike other property markets internationally, the Australian market is driven by natural demand from a strong economy and high incoming migration, so the short term slow down will do nothing to dampen the demand and will create a small build up of activity that will surge the market once confidence returns.
For those looking to buy in the fast paced markets of Melbourne and Brisbane, the rate rises have helped in finding supply at a reasonable price for this brief period, as prices had been increasing almost 20%pa prior to the interest rate rises and will likely continue to rise at this pace again once fear of further rises subdues.
Until then, some bargain hunting is possible, but dont expect this period of uncertainty to last too long, if rates remain unchanged again in June then it will be business as usual in the property market.
Click here to view the RBA Governors Statement on Interest Rates.
This follows unwelcomed 0.25% rises in November 06 and February and March this year. We had also seen the banks sneak in two small rises of their own of 0.2% each which was blamed on the higher cost of borrowing as a result of the global credit crunch fallout from the US Sub Prime Market.
The Reserve had stated that it was trying to keep inflation in check, which had hit the upper end of the range as a result of higher inflationary impact of housing and transport costs.
Even though the March 08 inflation numbers came in higher than December 07, the RBA has at least taken a cautionary stance which seems more logical than the recent increases, as it waits to see the effect of rate rises and global slow down in naturally reducing the inflation growth rate.
After the February rate rise, the Australian property market slowed considerably due to nervousness of further rises, and this second month of no change will be welcome news for all of those seeking a home.
Unlike other property markets internationally, the Australian market is driven by natural demand from a strong economy and high incoming migration, so the short term slow down will do nothing to dampen the demand and will create a small build up of activity that will surge the market once confidence returns.
For those looking to buy in the fast paced markets of Melbourne and Brisbane, the rate rises have helped in finding supply at a reasonable price for this brief period, as prices had been increasing almost 20%pa prior to the interest rate rises and will likely continue to rise at this pace again once fear of further rises subdues.
Until then, some bargain hunting is possible, but dont expect this period of uncertainty to last too long, if rates remain unchanged again in June then it will be business as usual in the property market.
Click here to view the RBA Governors Statement on Interest Rates.
