Experts tip RBA will keep rate at 2%: Finder.com.au

Experts tip RBA will keep rate at 2%: Finder.com.au
Experts tip RBA will keep rate at 2%: Finder.com.au

Property investors are urged to brace for higher housing prices despite experts tipping the Reserve Bank to leave the cash rate at 2.00% ahead of its board meeting on Tuesday, August 4, 2015.

Experts who responded to the Finder.com.au Reserve Bank Survey suggested given the latest two rate cuts in February and May are yet to filter through the economy and with unemployment stable, the Reserve Bank has no reason to move the cash rate in August.

31 economists and property experts were surveyed and unanimously agreed the RBA will hold rates at 2.00%.

19% of the experts surveyed forecast a rate cut by the end of the year, with Mark Crosby from the Melbourne Business School and Peter Boehm from Onthehouse.com.au expecting the cash rate to rise in the last quarter of 2015.

55% believe the cash rate will start rising next year and 39% consider there will be long stability before the cash rate will start rising beyond 2016.

Finder.com.au money expert Michelle Hutchison said while we may not see another rate cut this year, it’s still likely that property prices will continue to rise, which means higher costs for new borrowers.

 “According to the Finder.com.au Reserve Bank Survey, the majority of experts surveyed (21 or 68%) are expecting property prices will keep rising this year, while almost one in five (six of 19%) believe property prices will remain at the same level for the remainder of 2015. For the hottest property market in Australia, almost one in five experts (19%) believe the Sydney property market won’t ease for the next few years, while 61% expect it to ease next year and five experts think it could be as early as this year," Michelle said. 

“Despite this, the vast majority (81% or 25 of the 31 experts surveyed) believe there is no housing bubble. However 5 experts (16 percent) expect the housing bubble will burst within the next 18 months. One of the experts – Shane Oliver from AMP – said there is one housing bubble in Sydney and it’s likely to start reversing in 2017.

“We’re expecting more borrowers to start hitting the market in spring, which is traditionally the busiest time for the property and home loan markets. If you’re planning to hit the market this mortgage season, be careful with your budget as it won’t be worth over-stretching yourself in the heat of the moment to buy a home when rate rises are also around the corner.”

 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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