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High hopes for low interest rates

By James Brown

Buyers of property in Burpengary have been taking advantage of the all-time low cash rate since May, but as with any aspect of the economy, there's just no telling which direction it's heading in.

However, this hasn't stopped the Real Estate Institute of Australia (REIA) from making its own predictions. The group believes that since the Consumer Price Index (CPI) is lower than it should be, there's every chance the low cash rate will be around for a while longer.

"In the June quarter, the CPI rose by 0.7 per cent and an annual rate of 1.5 per cent," said REIA president Neville Sanders.

"These figures are below the Reserve Bank of Australia's (RBA) target zone of two to three per cent and should not put pressure on the interest rate outlook."

The RBA is keen to make sure that conditions in the wider economy are just right before taking any action on interest rates. Minutes from its meeting on 7 July reveal that there are high hopes for the property sector, but other areas of the economy have yet to pick up pace.

Governor of the RBA Glenn Stevens highlighted that people are keen to invest in property at the moment, as a nine per cent increase in activity was seen during the three months to March. There's also been an increase in the construction of new properties, further pointing to positivity in the sector.

Unfortunately, the economy relies on more industries than just real estate. This means that pressure will be growing on other sectors to assist growth in the Australian economy, especially now that the mining boom appears to have come to an end.

The REIA is hopeful that the cash rate will work in buyers' favour at least for the foreseeable future. It's therefore a good idea to think about speaking to an experienced real estate agent in Burpengary if you've yet to make your move onto the property ladder.

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