RBA Keeps Interest Rate at Record Low of 3% Due to Sluggish Housing Market
Announcement posted by Origin Projects - Land & New Homes in WA 26 Mar 2013
4Land Property Group, developer of house and land packages in Perth and Geraldton, reveals why Western Australian buyers have superior leverage in the housing market.
Joondalup, Western Australia, March 26, 2013 - On 4th March 2013, the Reserve Bank of Australia (RBA), announced that the interest rate would continue at 3%. Glenn Stevens, Governor of the RBA, said in a statement that, according to most indicators, Australia’s economic growth is close to trend, but stopped short of declaring a full economic recovery at this time.
Mr. Stevens cited many factors, both positive and negative. On the positive side of the ledger, he said that resource investment was possibly breaching its peak, retail sales had increased in January, negative global economic factors had eased, and there was a spike in job advertisements the day before the announcement. On the negative side, a relative lack of movement in the housing market was the major factor.
Although Mr. Stevens did not tip his hand, many economists are of the opinion that rates might be lowered to a new record low in either June or July if economic recovery is not further along by then. In October 2011, the interest rate was at 4.75%, as it had been for the preceding 12 months. Since then, the rate has fallen 1.75% to the record low of 3%.
For historical perspective, the RBA rate has been as high as 20.77%, in August 1982. Between March 1980 and August 1991, the interest rate was between 10% and 20% for all but six months. Rates slowly decreased into the current era; the current low of 3% was also in effect from May 2009 through September 2009.
The Australian housing market will be a determining factor in whether the interest rate is further reduced, kept constant or starts to rise closer to historical averages. Economists and statisticians would both predict that the rate will eventually undergo reduction to the mean; this means that the rate should move closer to historical averages.
4Land Property Group has successfully developed five housing communities in the Perth area, and is currently developing a planned community in the Geraldton area that is projected to include 2,500 lots. Lauren O’Connor, Marketing Manager for 4Land Property Group, feels that Perth and most of Western Australia are in a very good position in light of the continuation of the record low interest rates.
According to O’Connor, “We are very happy to hear that the interest rate will continue at its record low of 3%, and we feel that Perth, along with most of Western Australia, is in a unique position with a lot of market leverage. The Australian housing market is a major determining factor in the RBA’s decision to change or maintain interest rates. While the housing market across Australia is somewhat stagnant, the market in Perth and most of Western Australia is doing quite well.”
O’Connor continued, “Luckily for us, the interest rate is being determined by the majority of Australia, so we are currently enjoying the best of both worlds: a fairly strong housing market and low interest rates.”
O’Connor concluded, “If you are considering buying a new home, now is the time. Interest rates won’t stay low forever, and many of our new homes are currently priced below the average price for an established home. Time is of the essence.”
4Land Property Group is a developer of house and land packages in the Perth and Geraldton areas. For more information, please call 08 9301 4445 or visit their website: http://www.4land.com.au/
Mr. Stevens cited many factors, both positive and negative. On the positive side of the ledger, he said that resource investment was possibly breaching its peak, retail sales had increased in January, negative global economic factors had eased, and there was a spike in job advertisements the day before the announcement. On the negative side, a relative lack of movement in the housing market was the major factor.
Although Mr. Stevens did not tip his hand, many economists are of the opinion that rates might be lowered to a new record low in either June or July if economic recovery is not further along by then. In October 2011, the interest rate was at 4.75%, as it had been for the preceding 12 months. Since then, the rate has fallen 1.75% to the record low of 3%.
For historical perspective, the RBA rate has been as high as 20.77%, in August 1982. Between March 1980 and August 1991, the interest rate was between 10% and 20% for all but six months. Rates slowly decreased into the current era; the current low of 3% was also in effect from May 2009 through September 2009.
The Australian housing market will be a determining factor in whether the interest rate is further reduced, kept constant or starts to rise closer to historical averages. Economists and statisticians would both predict that the rate will eventually undergo reduction to the mean; this means that the rate should move closer to historical averages.
4Land Property Group has successfully developed five housing communities in the Perth area, and is currently developing a planned community in the Geraldton area that is projected to include 2,500 lots. Lauren O’Connor, Marketing Manager for 4Land Property Group, feels that Perth and most of Western Australia are in a very good position in light of the continuation of the record low interest rates.
According to O’Connor, “We are very happy to hear that the interest rate will continue at its record low of 3%, and we feel that Perth, along with most of Western Australia, is in a unique position with a lot of market leverage. The Australian housing market is a major determining factor in the RBA’s decision to change or maintain interest rates. While the housing market across Australia is somewhat stagnant, the market in Perth and most of Western Australia is doing quite well.”
O’Connor continued, “Luckily for us, the interest rate is being determined by the majority of Australia, so we are currently enjoying the best of both worlds: a fairly strong housing market and low interest rates.”
O’Connor concluded, “If you are considering buying a new home, now is the time. Interest rates won’t stay low forever, and many of our new homes are currently priced below the average price for an established home. Time is of the essence.”
4Land Property Group is a developer of house and land packages in the Perth and Geraldton areas. For more information, please call 08 9301 4445 or visit their website: http://www.4land.com.au/