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What the RBA’s rate hold means for Brisbane’s prestige market

Welcome news this week from the Reserve Bank of Australia, who decided to hold the cash rate at 4.1 per cent. Interest rates affect all asset prices, including housing prices. This month’s cash rate pause by the RBA has certainly allowed prospective property buyers breathing space from the previous tightening of financing constraint.

So, this week offers a reprieve for buyers, and more encouragement for sellers to offload property in what is already a boom selling market. Brisbane’s prestige property market has contradicted this historic and expected pattern, due to a shortage of stock and the interstate migration influx. So any hold or, dare I say it, cutting of interest rates can only result in a greater buoyancy of prestige prices as more buyers become eligible to enter this niche market.

It’s important to flag the RBA’s direct hesitancy around any of us getting our hopes up about further immediate cash rate relief. In his statement this week, RBA Governor Philip Lowe warned that inflation remains too high, and will be so for some time to come. His last paragraph being the most telling:

“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve. The decision to hold interest rates steady this month provides the Board with more time to assess the state of the economy and the economic outlook and associated risks. In making its decisions, the Board will continue to pay close attention to developments in the global economy, trends in household spending, and the forecasts for inflation and the labour market. The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.

The great news for stakeholders in Brisbane’s prestige property market is that it is somewhat of a silo, appearing to remain untouched from the wider financial forces at play. Our blue-chip market is being deemed incredibly affordable by southerners streaming across the border, lured here by the unbeatable lifestyle, superior weather and exciting growth evolution of the world’s greatest city.

I hope you enjoy the read.

Matt Lancashire