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Another month, another interest rate announcement

By Brett Pilgrim

Interest rates have been the centre of the real estate universe over the past few years, with the dropping cash rate encouraging activity in the property market. For those investing in rentals in Adelaide, the latest announcement from the Reserve Bank of Australia (RBA) will likely offer some reassurance.

In a release that likely surprised no one, RBA governor Glenn Stevens revealed that the bank has decided to keep the official cash rate steady for yet another month. This means borrowing for property in Adelaide will remain incredibly cheap for the time being, and activity in the housing market should remain relatively healthy.

The Housing Industry Association (HIA) said the decision was widely expected, but what isn't so certain is what track the RBA will take in the months ahead. Depending on both domestic and international economic conditions, the bank may decide to pursue another cut or two before the year is out – alternatively, they might raise the cash rate by a number of basis points. 

"There will be persistent conjecture in coming months as to whether the easing rate cycle is over, or the RBA has another rate cut bullet or two it is prepared to fire," said HIA chief economist Harley Dale.

However, Mr Dale noted that regardless of whether the RBA cuts the cash rate once again, borrowing costs are already at historic lows and look set to stay that way throughout 2015/2016. According to recent research from the Australian Bankers Association, the average advertised variable rate on a home loan sat at 5.45 per cent in May – the lowest level since 1968. 

"That will help support housing activity at a time when there is scant evidence of strong momentum elsewhere in the domestic economy," he said. 

While the future remains slightly uncertain, one thing is for sure: Buying a property may make sense in this low interest rate environment. For assistance choosing the right home, as well as expertise in managing it, the team at Ray White Adelaide is on hand to help.

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