– During RBA’s emergency meeting held on 19 March 2020, decided to apply another interest rate cut of 25 basis to a new record low of 0.25%, providing two interest cuts in less than 3 weeks.
– The lowest Australia Dollar since October 2002 gives positive effect on property market, but given the current situation, very limited. It may help prevent the market fully back into down trend, but has less momentum to push the price up on the other side.
>> With the COVID-19 becoming a global crisis, in both health and financial sectors, most investors will become more conservative on following investing activities.
>> The plunges of global stock markets also put investors with less bullets they can use on property market.
>> Low dollar value will help on education sector, attracting more overseas students who may rent or buy properties. However current travel ban and potential shutdown of schools and colleges will put a break on their property investing plans.
– When COVID-19 crisis is over, hopefully before next Spring:
>> If only minimum increase on unemployment rate which means most people hold their jobs and incomes, the market will come back to the up trend. With government first home buyer stimulus, the market continues with more first home buyers jumping in.
>> If unfortunately significant portion of employees lost their jobs during this time, the low- and medium-range market will experience a hard time at least by the end of next financial year.
>> High end market normally has minimal connection with unemployment rate. However recent catastrophic plunges happened across all major stock markets globally and damage put on global business and tradings, will all affect how much money those high-end property buyers can use in their purchases.
>> High end property market will be on a case-by-case basis. But still the activity level will be no comparison with what it has before COVID-19 burst.
At today’s meeting, RBA decided to cut the cash rate by 25 basis points to 0.50%, a new record low, to support the nation’s economy under the potential threat from the global coronavirus outbreak.
– This is the first auction week in 2020, though some auctions or sales happened in a week before
– As the holiday season was just over, not many properties were put on for auction this week. Still the volume was higher than the same time last year. So did the auction clearance as well
– Given the small volume for this weekend, the auction clearance result was weighted lower than usual, which are 69%, 65%, and 72% from all three sources
– The property market starts getting back, with a much faster pace. 1.2% increase in January 2020 and 5.8% up in Q4 2019. The price in Melbourne has already reached previous peak and passed
– Reserve bank in today’s first meeting in 2020 decided to keep the interest rate unchanged at 0.75% but is considering the possibility of another cut in mid 2020
– RBA Keeps Interest Rate on Hold at 1 Percent
– A downturn in building construction industry in happening
– Sydney and Melbourne house markets rebounding but faster than RBA’s expectation
– On today’s monthly meeting, RBA decided to put the interest rate on hold, remaining at 1%
– But expects another cut later this year, to increase inflation, lower unemployment rate and boost economic growth
– Consumer Price Inflation (CPI) data for Q2 2019 shows an improving annual growth in underlying inflation of 1.4%, headline inflation increased by 1.6%,but still well below RBA’s 2-3% Target
– The escalating US-China trade war also poses a risk to Australian economy
– Regarding the current property price downturn, in RBA’s statement, comments as there are ‘some signs of a turnaround, especially in Sydney and Melbourne
– Auction clearance is now with no doubt in the proximity of 70%, and above 60% for the seventh consecutive weeks, with 73%, 69%, and 75% from all three sources
– Auction clearance is now higher than the same week last year, though the number of auctions is still less
– More media voices are now predicting the property price falls in Sydney and Melbourne will end later 2019 and mild price increases will more likely to be observed in 2020
– RBA cuts interest rates to a record low of 1 percent after a 25 basis point cut in June, with financial markets predicting the cash rate would fall to 0.75 percent or even 0.5 percent by mid-2020
– RBA would like to see the low interest rates to give the economy a boost, push the unemployment rate below 4.5 percent for the inflation to meet the 2 to 3 percent target
– The record low interest rates will also help the property market to stabilize its price falls observed in major cities, and hope to encourage more buyers, especially first home buyers into the market with the loan lenders more willing to take new loans on first home purchases than investing ones
– However RBA interest cuts may not be sufficient to turn around the weak Australian economy. Other measures such as tax cuts or spending on infrastructure may be needed
– In today’s monthly meeting, Reserve Bank of Australia (RBA) decides to cut interest rate by 25 basis to historic low of 1.25% after leaving the cash rate on hold at 1.50% for almost 3 years
– In RBA’s statement, it stated that “today’s decision to lower – the cash rate will help make further inroads into the spare capacity in the economy. It will assist with faster progress in reducing unemployment and achieve more assured progress towards the inflation target”
– It is likely for RBA to have a second cut following today’s 25 basis cut, most likely in August
– The Big 4 banks followed the RBA’s decision, with NAB and Commonwealth pass on the full 0.25% cut whilst ANZ and Westpac pass 0.18% and 0.20% cuts respectively