Without causing much stir, the Reserve Bank has kept the Official Cash Rate at a record low of 2.5%, after holding their second – last monthly meeting of the year on Melbourne Cup day.
The cash rate has remained at these levels for the past 15 months and experts surveyed by Finder.com.au are unanimous in predicting that the rates would remain on hold. This period of stability will encourage high activity in the property market, as sellers would still have enough time to list before the expected market slowdown on Christmas.
Speculations on the next rate hike are divided, with Westpac expecting the increase to happen as late as August next year.
Read more about this on the Smart Property Investment website.
The Australian dollar fell to a six month low at US89.32 – the lowest since March, as the US dollar surged against all G10 currencies. Iron ore prices also attributed to the local currency dropped, as it fell to a five year low.
Despite the drop, economists remain optimistic, with CommSec Chief Economist Craig James stating that the AU dollar is leveling to commodity prices. Job vacancies are also on the rise and is expected to pick up as it recovers from the mining boom slowdown. Surprisingly, the property market is set to benefit from the currency drop, as prices are set to rise with the interest rate expected to remain on hold for at least another year. Forecasts from SQM Research show that if the AU dollar were to drop below US85¢, Sydney prices could increase around 8% – 12% and 5% – 9% for Brisbane and Melbourne over the next year.
Read more about this on the Sydney Morning Herald website.