Interest rates remain on hold

Interest rates remain on hold

Posted on Tuesday, March 04 2014 at 1:58 PM

Investors can continue to enjoy low interest rates, with the Reserve Bank of Australia (RBA) keeping the cash rate on hold at 2.5 per cent for another month.

RP Data national research director Tim Lawless says it’s a win for investors
and the property market.

“As long as mortgage rates remain low, we would expect housing market
conditions to remain in positive growth territory, at least in trend terms,” he

“RP Data’s February results showed flat capital city dwelling values,
which will probably reassure policy makers such as the RBA that the
unsustainably high rate of capital gain that has been evident since June last
year may be winding down. Other key housing market metrics produced by RP Data
are continuing to indicate buyer demand remains strong across the housing

Auction clearance rates have consistently been around the high 70 per
cent mark since mid-February and mortgage demand, as measured by activity
across the RP Data valuations platforms, was at record daily averages during

Lawless adds the RBA would be viewing the strong market conditions as a
positive scenario, which has driven investment in dwelling construction.

“More housing market activity has translated to greater developer
confidence and a consistent upwards trend in new building approvals,” he says.

The Reserve Bank of Australia’s Governor, Glenn Stevens, says the board
considered the fact unemployment is edging higher and growth in wages has
declined. At the same time, dwelling prices have increased significantly over
the past year.

“Looking ahead, the Bank expects unemployment to rise further before it
peaks,” Stevens says.

“Over time, growth is expected to strengthen, helped by continued low
interest rates and the lower exchange rate. Inflation is expected to be
consistent with the two to three per cent target over the next two years.”

The Real Estate Institute of New South Wales president, Malcolm Gunning,
adds the current rates are very attractive for property investors and are providing

“The stability of property as an investment, coupled with record low
interest rates, means that it’s considered highly attractive compared to other
investments, especially shares,” he says.

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