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Reserve Bank reduces the cash rate

By Brett Pilgrim

If you've been thinking about expanding your portfolio of rentals in Adelaide, the latest decision from the Reserve Bank of Australia could give you the incentive to do so. After two months of steady interest rates, the bank has bucked the trend and slashed the official cash rate to 2 per cent, potentially paving the way for a resurgent property sector in Adelaide. 

This announcement was to be expected given the number of hints the RBA dropped at its previous two meetings, but it still comes as a pleasant surprise for homeowners. Predictions had been volleying in recent weeks about the direction the bank was going to take, but Governor Glenn Stevens quashed any doubts in a 5 May statement. He noted that a shift in monetary policy was appropriate at this point in time, to balance out lagging segments of the Australian economy.

The benefits are two-fold for owners of investment property in Adelaide. If the cut is passed on to bank customers, the average mortgage holder could see their monthly interest repayments slashed – something that could encourage you to purchase another home. 

As well, the latest trim could see the new home building industry pick up in South Australia. It's widely known that the construction sector is one of the strongest performing areas of the national economy, so another boost would likely benefit all states, as well as stimulate further investment and business confidence.

In fact, South Australia has already seen a 35.2 per cent improvement in the quantity of building approvals in seasonally-adjusted terms in March according to the Housing Industry Association (HIA) – and this decision could accelerate things further. 

"New home building has been amongst the strongest performing sectors in the economy and the low interest rate environment has certainly played a role in boosting industry activity," HIA economist Geordan Murray said in a 5 May statement. 

With interest rates set to give the property market a leg up, the time could be right to get in touch with Ray White about adding another slice of real estate in Adelaide to your collection. 

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