The latest happenings in the Melbourne property market. For our Essays and The Secret Agent Report, see our Research page.

Category Archives For: Interest Rates

No surprises, rates up

No surprises here and lets face it, it’s needed. A quarter percent rise just to help keep people on their toes somewhat.

You can read the full statement here.

Inflation has been been a rather large concern to the Reserve Bank. Probably the key pickup here was the statement ‘with the risk of serious economic contraction in Australia having passed some time ago….’

We really can’t see this having too much of an impact on things.

My thoughts on interest rates

A few questions have been asked of me about interest rates and it seems most follow it up with the answer themselves.

The small movement in rates was certainly an expectation for most buyers and will have very little impact on the market.

Most buyers entering the market at the moment know we are in a period where money is very affordable to borrow and this will change over the next 12 months.

Some of the big development companies are crying foul at the moment and saying how we are not ready for these movements. The fact is we are ready for these changes, but as developers know, the outer house and land packages are generally the first to suffer when rates increase.

‘and the RBA is normally conservative’

Here's some points from a key member of the Reserve Bank:

-Melbourne house prices are expected to continue to climb.

-Prices will continue to increase as the global economy improves and grows again, largely boosted by increased population growth and immigration, solid incomes and solid competition.

-Australian's have began to spend more of their income on housing, than ever before and have been getting bigger and better houses as a result.

-The latest data research puts the typical price of a Melbourne home at around $500,000 after increasing $46,000 over the past year. The typical price of a Melbourne unit sits at $398,000, after climbing $37,000.

Source: The Age

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Interest rates

Plenty of hype at the moment in the media world about rates going up. Well, it's going to happen no matter what really.

This should not be a concern however. Fact is, as a country we're traveling quite strongly at the moment. It would be a concern if rates were going the opposite way!

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Interest rates on the rise

Interest rates are set to rise as early as November and another rise could follow in December as the Reserve Bank seeks to keep a lid on inflation.

A 25 basis point increase to the cash rate would add $40 to the average monthly payment on a $300,000 25-year home loan, while a 50 basis points increase, adds $80 to the same sized loan.

Home prices have increased by 4.2% in the year to June, largely due to low interest rates and also the boosts to the first home buyers grant.

The RBA made back to back increases in November and December of 2003, it will be interesting to observe whether this will take place again.

Source: The Age

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Interest rates remain stable at 3.0%

Interest rates remain on hold from yesterdays reserve bank meeting as the economy seems to be in better shape than most of us had predicted.

In fact Australia has avoided a 'technical recession' at this point with figures released today showing gross domestic product in fact grew by 0.4%.

The mental stigma of being declared in a recession can do much damage. The fact that we'd now need another 2 quarters of negative growth for this to happen will be a boost to the economy and our property market in general.

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The outcome from yesterday’s rate hold

So the official cash rate will remain at 3.25% after the Reserve Bank met yesterday.

Many property seekers might see this is a disappointment. However, in an overall sense this a good news.

If interest rates keep falling because the economy is falling off a cliff, then I don't think that's going to help any of us.

Glenn Stevens (Governor Monetary Policy of the RBA) in his statement suggested that while we have troubles in our economy, it's still robust by international standards.

Glenn did however leave the door open next month for a rate cut if it was required.

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Interest rates drop by -1%.

As expected the RBA has dropped the cash rate by -1% to 3.25%. This is the lowest cash rate we’ve seen since the 1960’s in Australia.

One obvious stand out was the concern the Reserve Bank had of the slowdown being experienced in China at the moment.


A big day for Australia


A very anxious Australian public will be eager (including myself) to hear the outcome of the Reserve Bank's meeting today on rates.

No questions that the cash rate will again drop. The question is by how much: -0.5%, -1.0% or maybe -1.25%? My prediction is a drop of 1%, but lets see.

I'll have the latest info on the Reserve Bank's meeting as soon as it comes to hand.

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