Rate relief: RBA cuts the cash rate by 25 basis points
In This Week’s How's The Market | Edition 100
Rate relief: RBA cuts the cash rate by 25 basis points
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Rate relief: RBA cuts the cash rate by 25 basis points
The RBA has reduced the cash rate from 4.35% to 4.1%, marking the first cut after an aggressive rate hike cycle aimed at curbing inflation.
This decision comes as cost-of-living pressures ease, with annualized six-month core inflation now within the RBA's 2-3% target range.
At the same time, Australia's economy has faced seven consecutive quarters of negative per-capita GDP growth, signaling a potential need for monetary easing.
The rate cut was further influenced by weak wages growth, which underperformed the RBA’s forecast, alongside soft retail spending outcomes, suggesting subdued economic momentum.
Despite the cut, the RBA is expected to maintain a cautious and gradual easing cycle, given tight labour market conditions, a weak Australian dollar, and global economic uncertainty.
For borrowers, the 25bp rate cut offers modest relief, potentially lowering average mortgage rates from 6.32% to 6.07% if fully passed on resulting in an estimated $121 reduction in monthly repayments.
This is expected to provide some support to the housing market, as improved consumer sentiment strengthens household confidence.
However, rate cuts alone may not be enough to prevent further declines in home values. CoreLogic's Home Value Index has already recorded a 0.3% drop since October, with Melbourne, Canberra, and Hobart seeing annual declines.
While lower interest rates can help stabilize housing values, affordability constraints may limit any significant price growth in the near term.
What The Agents Are Saying
Even before the interest rate drop, agents have been telling me that the markets are heating up.
With some strong sales in the top of the market inner city as well as in the outer regions.
One market that is still struggling, which agents keep trying to sell me, are knockdown rebuild blocks or those that require massive renovation.
Apartments with high OC fees or upcoming works (I went through one today for a client) are also struggling, but some of the properties that we are seeing that are priced well, renovated and on good blocks of land are staying on the market for 7 days or less with multiple offers.
We are all very interested to see what the coming weeks auctions show us as they will be a great sign of whats next in the market in this new interest rate environment
The Wow Factor!
45 William Street, Essendon, Vic 3040
A rare gem that combines mid-century charm with opulent modern living, "FLORRIE" (Circa 1935) is tucked away in one of Essendon's most affluent neighborhoods.
This exquisitely designed property, which is situated on approximately 795 square meters with a 27.4-meter frontage, provides an outstanding lifestyle in a highly desirable area.
Designed for seamless indoor-outdoor living, the expansive alfresco entertaining zone boasts timber floors, synthetic grass, and a heated pool with spa-ideal for year-round gatherings.
This home, a blend of timeless elegance and modern comfort, is conveniently located near Lincoln Park, North Essendon Village, St Therese's Primary, and Buckley Park College.
Price Guide: $2,900,000 - $3,130,000
In The Media
Just over 1,800 homes set for auction across combined capitals
This week, 1,802 capital city homes are scheduled for auction, up 7.9% from last week's 1,670, but -13.8% lower than last year's 2,091.
Sydney is currently hosting around 800 auctions, a 28.2% increase from last week's 621 homes auction and 15.2% higher than a year ago.
Melbourne anticipates 666 auctions this week, a 1.3% decrease from the previous week (675) and a 33.2% decrease from the previous year (997).
Brisbane is expected to be the busiest auction market, with 154 homes set to go under the hammer, followed by Adelaide with 121 homes, Canberra with 56 auctions, Perth with eight, and Tasmania with one.
Final Thoughts
The RBA's decision to cut rates marks a shift in policy, reflecting easing inflation pressures and slowing economic growth. While this move provides some relief to borrowers and could boost consumer sentiment, broader economic challenges remain.
A weakening labour market, subdued retail spending, and ongoing affordability concerns may limit the impact of lower rates on housing and economic growth.
As the RBA navigates a cautious easing cycle, the effectiveness of future rate cuts will depend on global economic stability and domestic market resilience.
If you or someone you know would like assistance to buy this year, book in a call and we can discuss if we can help.
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Happy Buying!
Note: This is general advice and does not take into consideration your objectives, situations or needs. Please consider if this advice is suitable for you and your circumstances and speak to a professional before making any financial decisions.
