RBA's Cash Rate Stable for Second Month in a Row

The second month in a row! For property investors, recent news from the Reserve Bank of Australia (RBA) to leave the cash rate target unchanged at 4.10 per cent is encouraging. This means that current market conditions are becoming more and more promising for investors and the cost of borrowing money remains where it is for another month, at least. Although inflation in Australia is declining, it is still high at 6 per cent. Positively, at this point, the RBA's forecast is for CPI inflation to continue to decline as we move towards being back within the desired 2–3 per cent target range during 2025. This target is the main driver of the RBA and is always reported to be their highest priority. Within the property sphere, rent is becoming a large driver of inflation. Therefore, continuing to adjust the cash rate and affecting mortgage repayments could prove damaging to the RBA's goal of inflation reduction. This fact will continue to weigh on their cash rate decisions moving forward. At the end of the day, the cash rate could be increased again, but the outlook is much more positive now than in previous months. This positive outlook is also bolstered by the recent release of the Domain House Price Report. Following a rocky couple of years, house prices have increased for the second quarter in a row. Prices have seen an increase of 3.4% in the June quarter (which represents more than a halfway recovery of the 2022 downturn). Sydney is leading our way into recovery while Adelaide and Perth are currently experiencing an all-time high, having avoided a noticeable downturn entirely. Domain reports a mismatch in supply and demand as a driving factor of the market's recovery with significantly fewer properties for sale and relatively high auction clearance rates. However, these supply issues are beginning to ease which is predicted to slow, but not stop, the price growth we are seeing. While the RBA's recent cash rate increases continue to impact investor serviceability, a second month of stability suggests that our cash rate is potentially nearing its peak. For those would-be investors who are attempting to "time the property market", this point in the property clock reflects a great time to join a growing market. Whether you are trying to time the market or know the path to long-term property wealth lies in time in the market, get in touch with The Property Mentors today to book a free one-to-one strategy session. Let us work with you to build a property strategy to deliver results for years to come.