Interest rates: What interest rates freeze means for Gold Coast property sector

The Gold Coast economy is showing ‘clear signs of a slowdown’ as a year of interest rate rises bites. But property experts say the figures don’t show the full story about the city’s real estate sector.

A surprise cash rate pause has been welcomed by property sector experts who say the Gold Coast’s economic pain is already biting hard.

The board of the Reserve Bank of Australia (RBA) on Tuesday held the cash rate at 4.1 basis points, leaving interest rates on hold for just the second time since May 2022.

The move comes just three months after the cash rate was frozen in April – ending a run of 10 consecutive rises by the RBA.

The latest pause, which came on the back of a surprise fall in inflation figures, has been welcomed as the city’s economy continues to slow.

Governor Philip Lowe. Picture: NCA NewsWire / Christian Gilles

Real Estate Institute of Australia (REIA) Queensland spokesman and leading Gold Coast property figure Andrew Bell said the pause would benefit the city.

“The RBA is taking more time to assess what is clearly evidence of a slowdown in many segments of the economy and I am sure the great majority would agree there is a good deal of pain in the hip pocket right now, “he said.

“No further interest rate rises are necessary right now in light of the declining inflationary rate.

“What is frustrating for everyone is that the rates rises are affecting the people who least contribute to inflation and the pain is being felt in all the wrong areas so we need to ease of the pressure as quickly as possible.

The Gold Coast’s economy has been hit hard by the rise in interest rates. Photo: Regi Varghese

Reserve Bank Governor Philip Lowe said Inflation in Australia had “passed its peak”

“The monthly CPI indicator for May showed a further decline but inflation is still too high and will remain so for some time yet,” he said.

“High inflation makes life difficult for everyone and damages the functioning of the economy. “It erodes the value of savings, hurts household budgets, makes it harder for businesses to plan and invest, and worsens income inequality.”

Mr Lowe said the board was “still expecting the economy to grow as inflation returns to the 2–3 per cent target range, but the path to achieving this balance is a narrow one”.

“A significant source of uncertainty continues to be the outlook for household consumption,” he said.

“The combination of higher interest rates and cost-of-living pressures is leading to a substantial slowing in household spending.

“While housing prices are rising again and some households have substantial savings buffers, others are experiencing a painful squeeze on their finances and there are also uncertainties regarding the global economy, which is expected to grow at a below-average rate over the next couple of years.”

Mortgage holders are paying at least $1200 more each month than they were in May 2022 when the RBA began increasing the cash rate in a bid to clamp down on rampant inflation, initiating a tough year for households which have also been hit by significant cost of living issues.

Colliers Gold Coast director Steven King said the city’s real estate industry had largely withstood the interest rate pain.

“The decision by the RBA to hold interest rates at 4.10 per cent will be welcome relief for homeowners and investors on the Gold Coast and hopefully this is a sign that we are reaching the ceiling in the interest rate cycle,” he said.

“It should be remembered that interest rates are still historically low and therefore we see little stress from our clients with where the rates currently sit.”

More than 30,000 Gold Coasters are currently experiencing mortgage stress, a jump of more than 10,000 people than May 2022.