2013 June Australian Economy and Interest Rate

At its meeting today, the Board decided to leave the cash rate unchanged at 2.75 per cent.

Well the drop in interest rates last month, whilst welcomed by mortgage holders has done little to
boost the property market.

More buyers are entering the market but that was happening anyway. Prices however, are still relatively stable in most areas.

There are increasing reports of buyers being disappointed when they try too hard to grab a bargain
only to find that someone else has bought the property.

The increased buyer activity combined with a shortage of saleable stock causes this to happen.

The new home construction grants that are becoming more widespread throughout Australia are
proving to have very little effect on the construction market.

Some cynics are wondering if this is a deliberate money saving ploy by those State Governments.

In every case they have changed their first home buyer’s schemes to first home construction grants
resulting in far fewer payouts.

It has however had the effect of slowing down the ability of first home buyers to save the required
deposit to enable them to enter the housing market.

This will have a short term adverse effect of the property market but in the long term the first home
buyers will return to the market in their normal numbers.

This will undoubtedly mean that many first home buyers will have to spend more time in rental
accommodation whilst they are waiting to save up sufficient deposit.

This is good news for property investors.

They will have greater choice of good prospective tenants whilst at the same time the higher
demand will force rents to increase.