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How a cash rate cut can help Bentleigh house hunters

By Matt Hurlston

If you're after real estate in Bentleigh, a potential upcoming cash rate cut could spell good things for you.

As reported earlier, the Reserve Bank of Australia (RBA) decided the cash rate would remain at the record low of two per cent over the month of September. Glenn Stevens, governor of the RBA, attributed this decision to the need and capacity for economic growth.

Why a cut may be on the horizon

Dr Shane Oliver, chief economist at AMP Capital, shares some thoughts as to why we might be seeing a further cut to the cash rate, which hasn't occurred since May this year. A spike in mining investment, which many are now calling the "mining boom", saw the Australian annual GDP peak above 5 per cent. However, this is now quickly reducing as many of these mining projects are seeing completion.

This is evident in the capital expenditure numbers from the Australian Bureau of Statistics (ABS). From the March to June quarter this year, Australia recorded a 5.3 per cent and 0.8 per cent decline in expenditure on buildings and equipment and machinery respectively. The result is a drop of 3.9 per cent on total capital expenditure. Furthermore, over the 12 months leading up to June this year, the total capital expenditure decreased by ten per cent. This trend reveals a loss of momentum, caused by the end of the mining boom.

As a low cash rate will drive spending and borrowing and therefore increase consumption and investment, another cut may be the stimuli that's required.

As a homebuyer, this may be some potential good news to look forward to. A drop in the cash rate will most likely mean a cut for interest rates that are already at record lows, making it even less costly to take out a home loan for that Carnegie real estate.

Get in touch with Matt Hurlston and the experts at Ray White Carnegie to see how we can help you find great real estate in Bentleigh and Carnegie.

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