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What does the future hold for the cash rate?

By Ben Faulks

Waiting for conditions to be just right before entering the Evatt property market isn't always easy, especially with so many factors influencing your decision. It might be that you're waiting for the ideal property to come along, or to build up that all-important deposit a little more – it all depends on your individual circumstances.

One factor that is working in your favour at the moment is the official cash rate. It's been at an historic low of two per cent since May, bringing down the cost of borrowing for people across the country.

The Reserve Bank of Australia (RBA) meets every month to discuss which direction the cash rate should be heading in, leaving many analysts guessing what the outcome will be. Among them is the Real Estate Institute of Australia (REIA), which believes some recent economic data could point towards a period of interest rate stability.

REIA president Neville Sanders explained that the Consumer Prices Index increased at a rate of 1.5 per cent over the past year, which is beneath the RBA's target zone of two to three per cent. This means there isn't as much pressure on the central bank to increase the cash rate any time soon.

"With inflation under control combined with a slowdown in housing finance, it's reasonable to expect that the RBA board will not be increasing interest rates in the medium term, providing a stable outlook for home buyers," Mr Sanders commented.

At its 7 July meeting, the RBA noted that while the property sector is performing well, the same cannot be said for other areas of the economy. Investment levels are growing, potentially leading more people to go in search of the services of a real estate agent in Evatt.

Governor Glenn Stevens explained that apartment prices are currently growing at a more restrained rate than houses, primarily due to the growth in high-density dwellings within capital cities.

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