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1% cash rate tipped as markets move in buyers’ favour

By Katarina Taurian 02 January 2019 | 1 minute read

Values in key markets of Sydney and Melbourne will drop up to 10 per cent this year and the Reserve Bank of Australia (RBA) will respond by slashing the official cash rate, according to one of Australia’s top economists.

The latest data from CoreLogic shows Sydney’s home values are now down 11 per cent from their peak in July 2017, and Melbourne’s are down 7 per cent from their November 2017 peak.

According to AMP Capital’s chief economist Shane Oliver, those two markets will fall another 10 per cent or so, fuelled by factors such as less foreign demand, and uncertainty on property tax policies.

Australians can expect the official cash rate to be 1 per cent by December as a result, Mr Oliver said.

The RBA will be looking to boost consumer spending, and fend off any weaknesses in inflation, he added.


The cash rate has been on hold at 1.5 per cent for a record 29 months. The RBA sets the official cash rate when it meets once a month, and its next meeting is scheduled for 5 February.


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1% cash rate tipped as markets move in buyers’ favour
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