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Two branded mortgage groups have suggested Sydney’s booming property market is the likely reason behind the Reserve Bank’s decision to keep the cash rate on hold.
Following a month of intense speculation, the RBA left the cash rate at a record-low 2.25 per cent for a second consecutive month.
Mortgage Choice spokesperson Jessica Darnbrough said that while the falling value of iron ore combined with a sudden slump in business and consumer sentiment had many economists predicting a cash rate cut, “it seems Sydney’s soaring property values have forced the RBA to leave the cash rate on hold for another month at least”.
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“Over the last 12 months, Sydney’s property values have shot up almost 14 per cent, with research conducted by RP Data showing values in the capital city rose by 3 per cent in March alone,” Ms Darnbrough said.
“Across the country, Sydney is the only housing market where dwelling value growth remains in double digits, with the next strongest performer, Melbourne, showing a much slower rate of annual capital gain at just 5.6 per cent.”
Ms Darnbrough said that although the rest of the capital cities are experiencing more moderate growth, the RBA is clearly still wishing to tread carefully when it comes to Sydney and does not wish to do anything that could serve to inflate the capital’s housing market further.
Paul O’Regan, head of LJ Hooker Home Loans, said Tuesday’s announcement to leave the cash rate unchanged is not surprising given buoyant sales recorded in the harbour city.
“Auction clearance levels in Sydney remain near record levels and more often than not reaching prices higher than market expectations,’’ Mr O’Regan said.
“We are continuing to see large numbers at open inspections and agents are receiving multiple offers, so the demand is still there and fuelled by already low rates.’’
[Related: Sydney enjoys best auction result of 2015]
