RBA Interest Rate on Hold: What it Means to You

As expected, the RBA left their cash interest rate at a record low 1.5% during their December monetary policy meeting. So, what does that mean to people looking for house and land packages in Perth? Keep reading.

The RBA decision was the one virtually every economist in Australia expected. The economy is growing slightly, even though a short term slowdown is expected. In the September quarter, the Australian economy contracted slightly. This was only the fourth quarterly contraction in 25 years.

The RBA attributed the slight contraction to the “transition” following the end of the mining investment boom. They project that labour cost and inflation will both remain low for the near future. However, they did say the outlook for inflation on a global basis to be “more balanced than it has been for some time.”

According to the RBA, employment is expanding, but only part time employment. They do see continued growth for employment, both part time and full time. Ultimately, the board sent signals that they don’t intend to cut the cash interest rate anymore.

What it Means for House and Land Packages

If you are looking for a new home or your first home, this could be a great time to start the ball rolling. Interest rates are probably as low as they are going to get. Labour and equipment costs are relatively flat. This can’t last forever.

You may have a window as long as six months before labour and equipment costs do go up, in which case it will cost us more to develop lots for you. It will also cost builders more to build homes for you. This will result in slightly higher land prices and home prices.

Meanwhile, the interest rates should eventually rise again. Depending on your circumstances, some people may want to consider locking in a fixed rate for as long as possible. If you prefer the flexibility and terms of a variable rate loan, it would be wise to start now and take advantage of low rates for as long as they last.

To learn more, call Origin Projects today: (08) 6500 4488.