Rates to remain on hold, prices to continue to soar

by Julia Corderoy03 Aug 2015
With economists unanimously predicting the cash rate to remain on hold tomorrow, soaring property prices are not expected to take a breather.

In finder.com.au’s monthly Reserve Bank survey, economists unanimously expect the cash rate to remain on hold at 2% when the Reserve Bank meets tomorrow, Tuesday 4 August. 

According to the survey, many of the experts pointed towards the latest two rate cuts in February and May, saying they are yet to filter through the economy. Combined with the unemployment rate remaining steady, the Reserve Bank has no reason to move the cash rate in August.

But with rates to remain at historic lows, 68% of those surveyed are expecting that property prices will continue to head north. 

For Australia’s hottest property market, almost one in five experts (19%) believe that the Sydney property market won’t ease for the next few years. However, the majority (61%) expect it to ease next year.

But despite the fact the majority believe house prices will continue to rise, 81% deny there is a housing bubble. Sixteen percent say there is a bubble and it will burst within the next 18 months. 

When it comes to future of interest rates, almost one in five surveyed (19%) are forecasting another rate cut by the end of the year, while just 6% are expecting the cash rate to rise in the last quarter of this year.

A further 55% are forecasting that the cash rate will start rising next year, 16% of which believe it will be in the second quarter of 2016 while the remaining 39% expect hikes to start in the second half of the year.