Recent cash rate reductions have had a positive effect on the housing market, RBA governor, Philip Lowe, said in a speech yesterday, but further interest rate cuts are not off the cards.
In an address to the Australian Industry Group 13th Annual Economics Forum, Low said the overall rise in the household savings rate from ‘zero to around 10%’ for the past several years was a major factor in keeping the domestic economy steady in light of the mining investment boom.
“In general, the initial responses to a loosening of monetary policy would be expected to include stronger asset prices, improved conditions in the housing market, a lift in consumer confidence and a lower exchange rate. Much of this does appear to be occurring.”
Lowe went on to say house prices have increased by roughly 4% nationwide since mid-last year, after having declined for nearly 18 months previously.