Market/Finance News Blog: Reserve Bank to balance Sydney and wider economy

By the resi financial blog team, 21 April 2015

Market/Finance News Blog: Reserve Bank to balance Sydney and wider economy

Wherever you choose to buy a home, it's hard to escape news about rising property prices in Sydney. The Reserve Bank of Australia (RBA) continued to bring the New South Wales capital into its interest rate decisions and it looks like it will keep doing so, at least as long as values skyrocket. However, in a speech to The American Australian Association, RBA Governor Glenn Stevens has stuck to his guns about letting the city dominate all other decisions. 

In an address called "The World Economy and Australia", Mr Stevens covered a wide range of economic issues that the Australian economy has - and is - coming up against. The major topic of discussion has been declining demand for the country's resources from economic heavyweight China, which Mr Stevens noted will continue to have a big influence on decision making.

Monetary policy has been something of a catch-all over the past few months, with commentators expecting it to provide a solution. Mr Stevens indicated that easing interest rates have encouraged growth outside of the mining sector, particularly in the property sector, where strong numbers of new home starts and construction are helping economic development. However, he said talk about soaring prices has been restricted to Sydney. 

"Popular commentary is, in my opinion, too focused on Sydney prices and pays too little attention to the more disparate trends among the other 80 per cent of Australia," Mr Stevens said.

This is quite clear when you compare growth in the Harbour City with that average price across the capital cities. Weekly asking prices for houses in Sydney have increased10.8 per cent over the year to April 21 according to SQM Research, but average price increases across all capital cities is a more moderate 4.6 per cent. Interest rates could help encourage more growth in the housing sector, but Mr Stevens said the bank is considering all its options before going ahead. 

It's always interesting to hear what the experts have to say. There are some definite bright spots in the Australian economy, and the property market is just one of them. To see how you could join the throng of Australians choosing to channel their money into real estate, get in touch with a resi loan specialist for a range of home loan options.

Categories: Property Investment