RBA lets spring market play-out
The Reserve Bank of Australia board today abstained from further influencing the start of the spring selling season, traditionally the busiest season each year, but it is expected to closely watch price growth over the coming weeks and months, according to LJ Hooker.
The RBA is still waiting to see whether the effects of its August cut will address the market imbalance created by a dearth of listings and high buyer demand, said LJ Hooker CEO Grant Harrod.
The cash rate currently sits at a record low of 1.5 per cent, however, Mr Harrod said the cash rate could go even lower.
“Listing volumes are very tight and borrowing rates are at unprecedented levels. This has supported continued price growth in the major markets of Sydney and Melbourne over winter, and to a lesser extent in other states,” said Mr Harrod.
“Most pundits thought this growth would plateau over 2016; it’s certainly slowed in comparison to previous years, but it’s still making healthy gains.
“While the Board wants to watch the start of the traditional spring selling season play out, I hope the arrival of spring will bring upgraders out of the woodwork.
“If the market doesn’t experience the traditional spring influx of listings and price growth continues to gather pace, we could see another cut before summer to entice upgraders to take their properties to market, improving the market imbalance.”
Mr Harrod said the RBA would also watch the strengthening Australian Dollar, global concerns around Brexit and a slowing Chinese economy before shifting rates.
“The board still has room to make further cuts, but they may be starting to question the impacts,’’ said Mr Harrod.