Already the RBA’s decision on the rate cut to 4.10% gave hope to the property market after a long time of suffering from inflation. But today, RBA decided to hold this rate without any more relief. Since inflation is under control, the RBA pursued the same cash rate.
As with many concerns, how will it shape the property market? Surprisingly, despite this, a few banks are already adjusting their interest rate projections, with some expecting cash rates to drop to 3.10% and some to 3.85% this year.
Impact of RBA’s Decision on Property Market
Since there is no rate cut, affordable housing will remain a major concern for homebuyers. Additionally, it will significantly impact the borrowing capacity as property prices continue to rise. Data revealed that after the mid-February rate cut, the capital cities already saw high prices.
In Sydney, 2.85% annual growth, in Brisbane 9.39%, in Adelaide 11.32%, in Perth 11.53%, in Hobart 1.78%, and in Darwin 3.78%. However, some cities have also seen negative change, such as Melbourne (-2.26%) and regional areas of Victoria (-1.53%).
Increasing Migration and RBA’s Decision
Meanwhile, more and more people are migrating from the capital cities to regional areas, which is creating more pressure on the property market. With low housing affordability and a growing population, the RBA’s decision to hold the same interest rate worsens the situation.
Now more demand will grow, leaving borrowers with a limited chance of affording the best homes for them.
Government Schemes as Hope
In such a case, borrowers can still rely on government schemes like FHOG (First Home Owner Grant). Government assistance is available to borrowers under this programme, depending on the state in which they intend to purchase their first residence. For example, if they have purchased their first home in regional Victoria from 1st July 2021, they can receive a 20k grant. Additionally, if they have planned their first home in some area apart from regional Victoria, they can still get a 10k government grant.
Housing Australia Future Fund is another assistance where people can fund their housing through government aid of up to $10 billion.
Impact on Bank Rates
Though some banks have already adjusted their rates, there’s a limited chance of getting the best loan options for borrowers. Meanwhile, the RBA’s decision to maintain the current rate will cause the demand for loans and housing to reach its maximum.
Most importantly, a few banks still haven’t changed their rates yet. These changes will likely bring fluctuation in the rate, which will increase the concerns for borrowers.
Final Words
So, it is more likely we can see mixed outcomes in the property market with uncertainties about property market prices and housing demand. Additionally, more and more borrowers may search rigorously for better loan options amid growing affordable housing concerns.
For more information on RBA’s decision to hold the cash rate at 4.10%, call us at 1300 GET LOAN or 0456 456 267 or Book the Appointment at Nfinity Financials.
