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The RBA slashed its key interest rate by 25 basis points to 2 per cent this week, as concern surrounds climbing property values, as well as the strength of the Australian dollar and weakness of iron ore prices.
This is the second time that the bank has cut rates this year, following a similar move in February 2015. The decision arrives just as the latest CoreLogic RP Data report confirms that property prices continued to rise by an average of 0.8 per cent in April 2015 across the country’s capital cities.
The increase was a smaller rise than the 1.4 per cent month-on-month rise recorded in March 2015, but overall dwelling values shifted higher over the past month across every capital city, except Canberra, where values showed a 1.5 per cent drop.
The annual rate of growth has also seen a slight rebound, with dwelling values now 7.9 per cent higher over the past 12 months across the combined capital city index.
“Annually, the rate of capital gain has slowed since April last year, however, since the February rate cut the Sydney and, to a lesser extent, Melbourne housing markets have caught a second wind which is reflected in the higher rate of capital gain as well as the very strong auction results and rapid rate of sale for properties sold via private treaty,” comments CoreLogic RP Data head of research Tim Lawless.
“Sydney dwelling values are now 40.2 per cent higher relative to the May 2012 trough. If you factor in the previous 2009/10 phase of growth, Sydney values are now up 65.4 per cent post GFC,” he adds.
“Melbourne is the only other capital city that comes close to this measure where dwelling values are 52.3 per cent higher post GFC.”