The Reserve Bank has unsurprisingly
decided to cut interest rates this month indicating increased concern over the
prospects for the national economy. Rates have now fallen by 2.25 percent since
the current easing cycle commenced in November 2011 and are now at a record low
2.5 percent.
Latest data supports the gloomy
economic outlook with the jobless rate rising over June and building approvals
down sharply over the month. The lower dollar and a recovering sharemarket are
however a positive together with increased buyer activity in the housing
market.
Housing markets continue the revival
generally evident over the past year and fuelled by historically low interest
rates. Solid to strong house price growth is now being recorded in most capital
city markets as buyer activity and confidence continues to rise.
"The Reserve Bank has unsurprisingly
decided to cut interest rates this month to offset the real prospect of sharply
declining economic activity. The bias for interest rate settings will remain
downwards in the near future with the level of unemployment the key to further
rate cuts", says Dr Andrew Wilson Senior Economist for Australian Property
Monitors.
"Home buyers and mortgage holders will
welcome lower rates when passed on by the banks and this will add fuel to an
already strong mid-winter performance by most capital city housing markets.
Although home buyer activity thrives on low interest rates, the key to sustained
growth in housing markets is a healthy economy and low unemployment".
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