Property Market Information: Is the RBA's bark worse than its bite?

By the resi financial blog team, 10 October 2014

Property Market Information: Is the RBA's bark worse than its bite?

The news this month that the Reserve Bank of Australia (RBA) would leave the cash rate unchanged at 2.5 per cent would have come as a welcome relief to many considering investing in property, as well as those with existing home loans.

The statement from RBA Governor Glenn Stevens on October 7 came as a surprise to many, as he not only declared current economical conditions to be accommodative, but also seemed to breeze over residential property prices in Australia.

Although acknowledging the increasing role of investors in the property market, the RBA Governor did not allude to any specific measures to be taken to reduce investor lending or purchases, and seems at the moment to be content to let the market take its course.

"Investors continue to look for higher returns in response to low rates on safe instruments. Credit growth is moderate overall, but with a further pick-up in recent months in lending to investors in housing assets. Dwelling prices have continued to rise over recent months," said Mr Stevens.

This is in contrast to various RBA statements over the previous couple of weeks that have alluded to macroprudential tools and other forms of financial policy intervention to quell rising rates of speculative purchases.

There has been talk in the media that the warning of the RBA in it's bi-annual Financial Stability Review was enough to keep a lid on prices, with the national growth in residential property prices for September being a mere 0.1 per cent according to an October 1 release from RP Data.

Price growth in September for Sydney was 0.8 per cent, second to Adelaide at 0.9 per cent, with Brisbane rounding out the top three at 0.7 per cent. All of the other capitals posted negative price growth, but none greater than negative 1 per cent, indicating a general slow down for the first month of spring.

If the current market conditions of low interest and stable growth have got you thinking of investment property or purchasing your own home, talk to a resi lending specialist today.

Categories: Home Loans, Property Investment