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Finally the pressures upon Australians will be eased and we have a reason to look positively at the property market in 2008.
As commented yesterday by Simon Turner in his Word on the Street article, The Reserve Bank of Australia at 2.30pm today announced that they would cut interest rates by 0.25% (25 basis points). Their long term view is that inflation will be under control and within its target area by 2010, meaning that the likelihood of a further 0.25% cut next month is good.
The Governor of the Reserve Bank believes that the previous tightening of monetary policy has exerted appropriate pressure on demand and the bank believes that inflation will drop below 3 % by 2010. This bodes very well for those looking to buy and sell property and is the start of what I believe to be a series of interest rates cuts over the next 2 years.
If the banks pass on the interest rate cuts there will be an enormous increase in consumer confidence. Given that long term rates have already been cut by many lenders the news for property is all good.
Three quarters of Australians are worried about their ability to pay their bills, as inflation remains at elevated levels, a survey by a consumer credit check company shows.
A phone poll commissioned by Veda Advantage showed that 75 per cent of respondents had debt repayment anxiety.
Price rises were a concern for 55 per cent of those polled, such as rising food and petrol costs, with one in two complaining about higher food prices.
More expensive health care was a concern for 44 per cent, with climbing mortgage and rent costs an issue for 37 per cent.
The study also found that 1.3 million Australians spend more than half their income on debt repayments, and 1.8 million Australians spend more than 40 per cent of their income on repayments.
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