Interest rates: What RBA slashing cash rate means for Gold Coast property market

Relief is on the way for struggling mortgage holders, with the Reserve Bank slashing interest rates for the first time in nearly five years. FIND OUT MORE

Relief is on the way for struggling mortgage holders, with the Reserve Bank slashing interest rates for the first time in nearly five years.

The board of the Reserve Bank of Australia (RBA) on Tuesday cut the cash rate by 25 basis points, taking interest rates to 4.1 per cent.

The move, long anticipated by economists, promises some relief after nearly three years of pain.

This means a household with a $750,000 mortgage will pay $115 less from this month, with their repayments having increased by more than $1800 since May 2022.

However leading real estate industry figures have mixed views on how much the changes will impact the market.

RBA Governor Michele Bullock said in a statement that the fall in inflation had led to the decision.

“The Board’s assessment is that monetary policy has been restrictive and will remain so after this reduction in the cash rate,” she said.

“Some of the upside risks to inflation appear to have eased and there are signs that disinflation might be occurring a little more quickly than earlier expected (but) there are nevertheless risks on both sides.

“The forecasts published today suggest that, if monetary policy is eased too much too soon, disinflation could stall, and inflation would settle above the midpoint of the target range.

“In removing a little of the policy restrictiveness in its decision today, the Board acknowledges that progress has been made but is cautious about the outlook.

Reserve Bank of Australia Governor Michele Bullock on Tuesday. Picture :NewsWire/ Oscar Colman

“The Board will continue to rely upon the data and the evolving assessment of risks to guide its decisions.

“In doing so, it will pay close attention to developments in the global economy and financial markets, trends in domestic demand, and the outlook for inflation and the labour market.

“The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that outcome.”

The reserve bank began increasing rates in May 2022, just weeks out from that year’s federal election, in a bid to curb rampant inflation.

Inflation is currently sitting at 2.4 per cent, having fallen from a height of 7.8 per cent in late 2022.

The last time interest rates were lowered was in November 2020 during the first year of the pandemic, when the Reserve Bank dropped the cash rate to a record low of 0.10 per cent where it remained until May 2022.

While it’s a relief for households which have been struggling to make ends meet, few expect it to have a dramatic impact on the Gold Coast’s housing sector, which slowed only slightly despite the 13 rate rises across a 15-month period in 2022-23 and the cash rate remaining stagnant since November 2023.

Ray White Surfers Paradise boss Andrew Bell said the decision would prove more symbolic than opening the floodgates for the city’s market.

“There is not an overwhelming amount of evidence that we have completely extinguished inflation but I doubt there will be a significant change in the market in the short-term,” he said.

Andrew Bell of Ray White Surfers Paradise. Picture Glenn Hampson

“A quarter per cent drop will not significantly affect someone’s finances or spike the interest of anyone who has been sitting on the fence.

“You’re not going to see open homes packed with waves of buyers so it will be more symbolic than anything else.

“The people who will most be affected by this are those on the mortgage belt who are struggling to make ends meet, but there won’t be party crackers going off over this – people will just say it is about time.”

Developer Ted Cronin, CEO of Orchard Property Group, agreed.

“A rate cut can put downward pressure on the Australian dollar, further fuelling inflation on imported goods.

“A single rate cut isn’t going to drastically improve the economy’s trajectory or people’s lives – although it will help somewhat.

“In my view, rate drops will need to occur in quick succession to be effective.”

Others, including Highland Property Gold Coast managing director Hanan Cawley, are more bullish.

“I think it will have a positive impact because many buyers have been sitting on the sidelines waiting for something to happen before making a decision,” he said.

“Once we have rate cuts, I think a lot of those will jump into buying mode and the stock which is on the market will sell quickly.

“While property prices have not fallen on the Gold Coast unlike other parts of Australia, buyers have been slower in making their decisions so with this news, I think it will speed up.”