Interest rate debate continues but Australian labour market performing comparatively well

The results from this week’s property auction in New South Wales reveal continued modest improvement in the market.

A clearing rate of 57 per cent illustrates consistency over the past month, fluctuating mildly between 56 per cent and 62 per cent for four weeks running.

The Reserve Bank of Australia (RBA) held interest rates at 4.25 per cent this month, leading to speculation about the resulting actions from major banks.

Chief executive officer of the financial comparison website RateCity Damian Smith reported moves that seemed to disregard RBA’s decision.

“Forty-five lenders hiked their variable home loan rates by an average of 12 basis points despite the Reserve Bank keeping the cash rate on hold last month.”

These events spark concern over the reaction of potential buyers.

Real Estate Institute of New South Wales chief executive officer Tim McKibbin referred to consumer research by Real Estate View when he said, “interest rates are a key concern for prospective buyers – particularly when banks are increasing mortgage rates independent of the RBA’s decisions”.

While the battle of interest rates may ruffle some feathers, there is positive news coming from the Australian Bureau of Statistics.

The country has been weathering the Global Financial Crisis comparatively well to other countries, highlighting the positives of the Australian labour market, as well as investing in Australian properties.

While the unemployment rate rose slightly from the previous year, it remains one of the lowest in the industrialised world – reflecting the Australian labour market doing comparatively well.

Minister for employment and workplace relations, financial services and superannuation Bill Shorten noted inevitable effects of the European turmoil but remained confident in the financial future of the nation.

“The Australian economy, however, is built on strong fundamentals, with low debt and low unemployment and the government has a proven track record of dealing with global instability during the GFC,” he said.

By Steve McKnight

Steve McKnight, the founder of PropertyInvesting.com, is a respected property investing authority as well as Australia's #1 best-selling business author.