The Reserve Bank of Australia decided to reduce the cash rate to a new record low of 0.50 per cent. The board came to this decision in response to the economic impacts brought out by the coronavirus outbreak.
In his statement, Governor Philip Lowe said COVID-19 is “having a significant effect on the Australian economy.” He mentioned education and travel sectors are taking in big hits. There are still no signs of the virus being contained in the country. It is also too early to predict the magnitude and duration of these impacts. But, Lowe is confident that when the virus is contained in the country, the economy will pick up. “This outlook is supported by the low level of interest rates, high levels of spending on infrastructure, the lower exchange rate, a positive household consumption,” Lowe said.
Despite the coronavirus outbreak, housing markets in Australia are holding their grounds. In Melbourne, investors are optimistic that land market sales will continue to improve. According to RPM’s latest residential market review report, Melbourne’s land market increased to 3,185 (17 per cent) for the December quarter from the previous quarter. Furthermore, November last year recorded the eighth straight month of sales growth. Buyers and investors are “seeing more value in a block of land or a house and land package rather than an existing house - buyers are seeing value in land market given they can negotiate a well-priced largest lot,” according to RPM’s communities head Luke Kelly. Property optimism is also back on track and many investors are positive of price increase in the near future. In South East Queensland, majour cities are still recording affordable housing and strong capital investments. New majour infrastructures are also getting the green light mainly in Sunshine Coast and Brisbane. “There are further signs of a pick-up in established housing markets, with prices rising in most markets, in some cases quite strongly,” Lowe stated. Experts are expecting yet another cut by the RBA bringing the cash rate down to .25 per cent.