The Reserve Bank of Australia (RBA) board now only meets once every six weeks for a total of eight meetings in the year (instead of 11 meetings previously). Today was the first meeting under the new schedule of fewer meetings and the announcement was no surprise with rates to remain on hold again at 4.35%.
The RBA has reiterated its commitment to taming inflation to within its target range of 2-3% in a reasonable time frame. It may look on the surface like this is heading in the right direction with inflation only being 3.4% for the 12 months ending 31 January 2024. Therefore, many economists, including all from the Big 4 banks, are now forecasting interest rate drops sometime later in 2024 and maybe as soon as August.
This cannot come soon enough for many borrowers, particularly those who borrowed when mortgage rates were about 2%. Real estate listings and sales have continued to see a rise in mortgage stress-related borrowers unable to cope with the higher loan repayments and other living costs. In addition, the banks are seeing a higher number of hardship requests.
The result of all this in our region seems to have created a two-tier market based on price. Those properties priced above $2,000,000 and those below. The higher-priced properties are taking much longer to sell while those around $1,500,000 are going like hot cakes.
The Sydney buyers for those higher priced properties are in higher numbers compared to 2023, however, have a lot of listings spread along the coast to choose from. Until interest rates start dropping, it seems this scenario will continue for the time being.
About the writer
Ian Pepper has had a long and distinguished career as a finance and real estate professional. Originally trained as a Chartered Accountant in 1995, Ian worked in Sydney and London. He has an MBA from Macquarie Graduate School of Management and now sells real estate with Ray White Helensburgh. Ian also volunteers with local community groups including school P&Cs, sporting clubs and business chambers.
