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  • October 2017

News & Media

What will interest rates do to property investment markets in 2013?

ANZ believes that interest rates will be cut four more times to just 2.00%. The general consensus is that there will probably be two more interest rate cuts in order to stimulate housing construction and other non-mining sectors of the economy. The cash rate in Australia directly impacts the rate at which lenders set their mortgage rates and thus there is a strong correlation between interest rate movements and property market confidence. The RBA is all too aware of what effect a cash rate of 2.50% could have on property prices and has warned Australians that a return to double digit rates of growth would be undesirable and imprudent. Property investors need to be aware that while Australia-wide growth in 2013 is likely to be moderate, some markets will fall in line with the ‘slow melt theory’ and others will grow sharply. As the RBA will use its blunt interest rate tool, it will be able to do little to stem markets which boom in value, so keep an eye out for what happens in markets with tight rental supplies such as Perth, Darwin and Sydney in particular. According to AMP the lower interest rates are also expected to make 2013 a prosperous year for the Aussie stock market, although, or course, such short-term securities market predictions are usually to be ingested with a proverbial grain of salt.

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