Economists and industry analysts say the RBA decision to keep the cash rate at 4.35 per cent will not have a material influence on the sector.
Easing inflation, soft economic growth and a gradual loosening in labour markets was enough to stave off another rate hike, according to CoreLogic’s Tim Lawless. But it’s not enough to have a dramatic impact on the housing market.
“We aren’t expecting today’s outcome will have a material influence on housing trends,” he said.
“While stable rates and lower inflation should help to lift consumer sentiment, which has historically shown a close relationship with property sales, the August hold decision may not be enough to see that rise in consumer sentiment flow through to housing market activity.”
Recent property price rises are more to do with low supply, tight rental conditions and demographic factors, according to the CoreLogic research director.
“Many of these factors are now losing their potency, with the trend rate of home sales easing as affordability becomes more challenging, migration slows and momentum leaves the upswing in rents,” he added.
“Even if sentiment lifts, an improvement in affordability barriers or strengthening in household balance sheets isn’t likely until interest rates start to fall.”
That isn’t likely until next year, according to RBA governor Michele Bullock who acknowledged it was not want people wanted to hear.
“I know there are many households and small businesses that are struggling with interest rates where they are,” Ms Bullock said.
“Many people are doing it tough and we’re very conscious of that. The board is very conscious of that.
“But really the best thing we can do, and I’ve said this before, the best thing we can do is to bring inflation back down to target, because we can’t let inflation get away. It hurts everyone.”
Ray White chief economist Nerida Conisbee does not see a rate cut in the near term either.
“At the start of 2024, the market was timing a rate cut for October,” she said.
“Since then, inflation has not come down as quickly as hoped. Now, the timing for a cut is June 2025.
“Forecasts and market outlooks can of course change quickly but for now Australia is an outlier in terms of the timing of its cuts. Most major economies are now cutting rates.
“The latest central bank to cut rates was the Bank of England which cut rates last week.
“The US is set to move next month. The jobless rate in that country hit its highest level in three years last week and this sparked speculation that rate cuts could come in a lot quicker than previously expected.
“These countries will join Switzerland, Sweden, the European Union and Canada which were the first to move.”
