The Reserve Bank of Australia has dropped the official cash rate from the already historic low of 0.25 per cent to just 0.1 per cent. This was the first time since 2011 that a Melbourne Cup day cut has been announced, making it a very happy day for some, and perhaps a great consolation for others.

The RBA cited weak household spending, rising unemployment and inflation as the key reasons for the continued monetary support. The hope is that the cut will encourage people to spend up big for Christmas, which will aid in stimulating the economy and providing employment opportunities.

Economic recovery is underway, however it will still take some time to reach the pre-COVID level, and the RBA are not expecting to increase the cash rate for at least three years.

What does this all mean for real estate and housing?

On average across the country, property prices have increased by 4.8 per cent over the last 12 months to September. In areas where prices have declined, it is largely as a result of restrictions on real estate activities, such as no open homes, auctions, inspections etc. For example, in October, Melbourne was the only capital city to record a fall in housing prices.

The rate cut announced on Tuesday should further stimulate housing by encouraging buyers to turn up to open homes and auctions, and motivating homeowners that withdrew their properties from the market at the beginning of the pandemic to re-list as they become more comfortable about achieving a strong result.

The big test will come in early 2021 when stimulus such as JobKeeper and bank payment deferrals wind up. Consider this when looking at your property goals. Perhaps now is the time to sell?

Contact us for a free no-obligation appraisal of your property. We’d love to help you achieve your property dreams.