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Rate cut expected in December

By Staff Reporter
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While rates have been put on hold this month, cuts are needed to spur on the housing sector leaving a number of experts speculating that we will see another cut before the year is over.

The ‘wait and see’ approach of the Reserve Bank yesterday was “certainly disappointing” AMP Capital’s chief economist and head of investment strategy told Smart Property Investment.

“Even though there are some signs that rate cuts to date have helped the housing sector, those signs are very tentative and, given the long lags involved, I don’t think rates have been cut enough to help confidence,” said Mr Oliver.

“It’s about balance, and we’re going to need to see retail and housing activity replace mining over the next year.”

For this reason, he said that he expects that rates will still be going lower.

“We seem to be going through a pattern here where the Reserve Bank cuts rates and then has a rest and then cuts again.

“There’s not necessarily a lot that will transpire between now and then to see a rate cut, but I think on balance they will cut in December ... although it will be a fairly close call.”

LJ Hooker deputy chairman, Janusz Hooker, is also of the opinion that a December cut is likely, as the Reserve Bank waits for the November CPI figures.

"A cut is now likely in December [although] it will be too late for the second half of the spring property market,’’ said Mr Hooker.

"The market is being dragged down by a lack of consumer confidence, so this is a missed opportunity to give housing a little kick along when it is needed," he said.

"It may take six to 12 months for rate moves to impact the housing market but it doesn’t take as long to influence a buyer’s mind-set."

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