What the RBA rate decision could mean for consumer confidence

What the RBA rate decision could mean for consumer confidence

Consumer confidence is expected to lift modestly after the Reserve Bank’s decision to hold interest rates at 4.35 per cent, offering welcome relief to homeowners and buyers. But an RMIT expert says the real test will come in spring, when a rise in new listings will show whether current clearance rates can be sustained.

Dr Callum Logan, School of Property, Construction and Project Management: 

"This rate decision comes as auction clearance rates improve from their recent lows. In Melbourne, last weekend’s auction clearance rates surpassed 60 per cent - the highest level since May this year. Sydney also saw auction clearance rates improve. 

"However, clearance rates need to improve further to be reflective of a balanced market, and the spring selling season will be a good test. 

"While there has been clearance rate improvement, the number of properties going to auction is less than this time last year for all capital cities. 

"Until recently, Perth, Brisbane and Adelaide markets were running hot while Melbourne and Sydney were stuck at a gas mark somewhere below simmer. However, the slowdown is now impacting all capital cities. 

"Recent tax changes for investors have reduced borrowing capacity as banks factor in the impact on mortgage serviceability, and the inability to secure finance for investment purchases within a self-managed super fund structure has closed off another pathway. 

“These are significant policy shifts occurring against a backdrop of higher inflation and global uncertainty. The blunt tool of monetary policy can deliver sharp hip‑pocket pain, and underlying inflation still exceeds the RBA’s two to three per cent target band.” 

Dr Callum Logan is a senior lecturer in the School of Property, Construction and Project Management.  

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General media enquiries: RMIT External Affairs and Media, 0439 704 077 or news@rmit.edu.au

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