Scope for lower interest rates on the horizon

After speaking yesterday about the interest rate remaining stable this week, it was interesting to read information just released by the Reserve Bank in which the Governor, Glenn Stevens, says he sees scope to ease monetary policy further, but believes the domestic economy is well placed for expansion towards the end of this year. Just what I was saying!

  

The opinion that the economy will be back on an upward incline by the end of this year is indeed good news for the real estate industry. I have mentioned before that at CENTURY 21 we have been seeing positive movement in the market despite the economic downturn. This activity has been taking place due to measures such as the government’s boosted first home owner grants and the ongoing rate reductions, so this latest prediction that things are looking even better is great news for the property market. Already we have seen many first home buyers enter the market, we are seeing more and more investors coming back, and we have also seen many current home owners upgrading, or trading up, providing stock for those first home buyers seeking established property.

  

The down side to what Glenn Stevens says is the forecasted weaker consumer spending over the next few months as the government stimulus wanes and unemployment looks likely to grow. These points, although understandably impacting on real estate to a certain degree, and more relevant to general consumer spending, and as there are separate measures in place to help boost the housing sector, it is likely that we will continue to see positive movement in the real estate market.

Although this week’s decision to keep rates at the current 3.0 per cent was a disappointment to those hoping for a further reduction, the current cash rate is at a 49 year low, and has been slashed by 425 basis points in just seven months. This is great news for many, evidenced by an upturn in borrowing for housing in the last six months, and the number of buyers and sellers making their way back into the real estate market each week.  
Posted by Charles Tarbey on 05/06/2009 at 8:36 AM | Categories:

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