The RBA defied market expectations and decided to keep the cash rate steady at 2.25%. The decision came after the previous rate cut decision saw a strong response from homebuyers, particularly in Sydney and Melbourne.
The growing concern of a housing price bubble triggered by exuberant investor activity has also weighed on the RBA’s decision to hold off cutting rates.
RBA governor Glenn Stevens noted that while credit growth is moderating overall, investor lending continues to outpace owner-occupiers.
As such Stevens flagged regulations to curb investor lending growth to cool the overheated Sydney market.
“Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities. The Bank is working with other regulators to assess and contain risks that may arise from the housing market,” he said.
Despite the decision to hold interest rate steady, Tim Lawless, research director with CoreLogic RP Data, expects property markets to remain on track to grow solidly this year as buyers take advantage of the low cost of debt.
“With mortgage rates potentially moving even lower later this year, it stands to reason that home values will continue to move higher to new historic highs,” he said.
“The buoyant housing market conditions should continue to support growth in housing construction which in turn provides a strong multiplier effect on the Australian economy.”
Home values in Sydney shot by 14% during the past 12 months alone. Since the upturn phase started in June 2012, Sydney’s dwelling values have surged by more than 38%.
Can you afford to buy in this suburb? Find out how much you can borrow
Top Suburbs :
tweed heads south
Get help with your investment property
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus and appointment is free.
We value your privacy and treat all your information seriously - you can check out