Australian interest rates held despite property market

Australia’s Reserve Bank has
decided to keep interest rates on hold in November, despite many experts
predicting a cut on the back of new house price figures.

CommSec economist Savanth Sebastian
had suggested that recent house price figures weren’t ‘the kind of data that
will hold the Reserve Bank back from cutting interest rates.’ However, with
property in Australia stabilising, the RBA has decided to keep rates on hold at
3.25 per cent. Keep reading to learn more about the current state of the
property market in Australia.

Australian house prices rise by 0.3 per cent in three months to
September

The Herald Sun reports that the Reserve Bank of Australia has ‘played
it safe and opted to keep interest rates steady.’ In a statement accompanying
the decision, RBA governor Glenn Stevens said: “At today’s meeting, with prices
data slightly higher than expected and recent information on the world economy
slightly more positive, the Board judged that the stance of monetary policy was
appropriate for the time being.”

The RBA held the interest rate
despite new figures which showed a mild rise in Australian house prices in the
three months to September. Values of property in Australia’s state capitals
rose by 0.3 per cent in the quarter to September 2012, after a 0.6 per cent
rise in the previous quarter.

St George economist Janu Chan
said the figures suggested house prices may have stabilised. She said: “It’s a
soft increase but still it provides further evidence of stabilisation in the
housing market. The RBA has hinted from their commentary that they want housing
to improve, so they will be looking for further signs of improvement in the
housing market.

“Going forward we should see
the lower borrowing costs start to take effect.”

 I’m surprised by the Reserve Bank’s decision not to reduce
interest rates in November. While rates have already been cut over recent
months, these latest house price figures hardly show that property is booming.

Author Nick
Marr

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