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Controlled inflation is good news for housing sector

Inflation levels are currently within the RBA's target zone, helping to make houses more affordable.

Following the interest rate cuts made by the Reserve Bank last month, the level of inflation in Australia appears to have been reduced after it was revealed that the Consumer Price Index rose by just 0.2 per cent in the December quarter, compared to 1.4 per cent in the previous three months.




This has helped to make house prices more affordable, with rents increasing by 0.5 per cent over the quarter and maintenance costs going up by 0.8 per cent, both of which are much lower than the yearly average.




By way of comparison, other industries saw much higher levels of price increases, with automotive fuel going up by 2.6 per cent and holiday travel and accommodation increasing by 6.2 per cent.




This raises questions over whether or not the Reserve Bank should introduce further rate cuts at the next board meeting in February, with many property professionals now advising against this, saying a general increase in consumer spending power should provide a natural stimulus to Australia's real estate sector.



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