The Reserve Bank of Australia has actually given the green light for real estate investment. One day after the Bank of Australia Governor Philip Lowe delivered a speech, the market share competition of mortgage agencies has led to a sharp rise in housing prices.
Dr. Lowe said that record low interest rates will continue for “at least” three years, because the central bank will not raise interest rates until it reaches actual, rather than expected, inflation targets, and further easing policies and rising asset prices may help To boost employment and economic growth.
The governor’s explosive news, including the announcement of large-scale purchases of new bonds, the so-called “quantitative easing” policy, pushed the Australian stock market to a seven-month high on Thursday and the Australian dollar exchange rate to a two-week low. The stock market fell 0.54% on Friday, but a larger bond purchase program and further interest rate cuts are expected to support the stock price.
Although many people believe that the central bank will lower the cash rate to 0.10% again on the Melbourne Cup day, which will not bring additional stimulus, but when the responsible lending rules are relaxed, the Bank of Australia will maintain low interest rates for a longer period of time. The market will thrive again and house prices will rise. John Symond and Mark Bouris, the founders of Aussie Home Loans and Yellow Brick Road, said the mortgage war is heating up and house prices will rise by as much as 7% from now on.
https://www.afr.com/policy/economy/rba-green-lights-property-risk-taking-20201016-p565rj