Historic move good for economy
LJ Hooker today welcomed the Reserve Bank of Australia’s announcement to cut interest rates today to historic new low levels, saying it is the right decision for the nation.
Grant Harrod, CEO of LJ Hooker, said after holding back on compelling financial data, the RBA has finally acted and delivered good news for homeowners, particularly for those living outside of Sydney and Melbourne.
“It is a significant historic decision and it is going to be of benefit to the economy, encourage businesses and in turn address unemployment,’’ he said.
“In terms of property, it will give a boost to markets like West Australia where prices have come back in recent months.
“Overall it will encourage buyers who have been sitting back watching the market and also keep investors active.’’
While Sydney house prices have dominated commentary, Mr Harrod does not believe today’s announcement will overheat the market although it should remain buoyant. It is likely to result in more listings, which have been at low levels and fuelling demand.
“Higher prices have seen a shift in buyer behaviour in Sydney and Melbourne, people are no longer selling and then buying because they fear they may not be able to purchase in the same market.
“It will be interesting to see if the rate cut will change attitudes and if it does, then we should see more stock which should also help contain prices.’’
Self-funded retirees may be tempted to move cash out of banks and into higher yielding investments, like property around the country.
Mathew Tiller, National Research Manager, said lower rates would help regional property markets that have been hit by the mining slow down, especially those reliant on tourism as a key industry for employment.
He believes that today’s announcement will give the Government further incentive to boost business confidence in next week’s Federal budget.
“They need to get them to utilise the low cash rate to borrow to grow their business and that in turn will boost employment,’’ Mr Tiller said.