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Property News

Reserve bank's role as housing market fulcrum

January 03, 2012

While the Reserve Bank of Australia (RBA) board is not set to be meeting for the first month in 2012, its past actions may already be having an impact on the state of residential real estate across the country.

As many seasoned homeowners will know, the interest rate set by the RBA is used as a broad tool to influence the spending behaviours of both individuals and corporations.

In particular, many investors and property professionals make use of the cash rate decision as a guide to understand how the various financial institutions in Australia will adjust their lending behaviour in the short term.

Higher interest rates are more likely to result in less loan approvals as the banks seek to ensure that their customers are capable of meeting increased repayment obligations - while lower percentages can lead to less restrictive practices.

With the statistics bureau showing that the total average wage of Australians has increased over the last year to August 30 by 4.2 per cent, it could mean that a decrease in the interest rate in February brings with it a sudden boom in buyers looking to enter the market in 2012.

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