March 2014

Welcome to our March newsletter

The decision came as no surprise to market analysts, who expect the RBA to continue their policy of low interest rates for the remainder of 2014. In his statement after the meeting, RBA Governor Glenn Stevens confirmed these expectations by saying that “On present indications, the most prudent course is likely to be a period of stability in interest rates.”

The RBA policy of keeping interest rates at their lowest levels since the 1950s, is designed to reduce the value of the Australian dollar against other currencies to stimulate our economy through increased activity in exports and local property investment. Governor Stevens said “the decline in the exchange rate seen to date will assist in achieving balanced growth in the economy.”

Governor Stevens also said that “the Australian dollar remains high by historical standards.” This could indicate that a further rate cut may be on the horizon later in the year – which would mean even more good news for mortgage holders and property buyers alike. Other factors which could influence the RBA to further cut interest rates are rising unemployment, weakening investment in the mining sector and the effect of the Government’s upcoming budget cuts.

According to the Australian Bureau of Statistics, the low interest rate environment has already had a very positive effect on all property markets, but particularly in new home constructions. Total national building approvals for January jumped 6.8 per cent to 17,514 dwellings, 35 per cent higher than this time last year.

This is the biggest annual rise in construction approvals since 2002 and one of the strongest monthly gains on record since mid 1983. Approvals for private sector houses grew by 8.3 per cent in January, while approvals for apartments rose 4.6 per cent.