The Reserve Bank of Australia met again and raised the cash rate by 0.25%.
👉 Background: The Reserve Bank of Australia meets on the first Tuesday of every month. Yesterday, they met again and yep, you guessed it, they raised the cash rate by 0.25%.
👉 What happened: The cash rate is now sitting at 4.10%, which means the 6 million Australians making mortgage repayments are under even more stress.
👉 What else: But here's the strange thing: after a drop in average house prices over the past 9 months, it seems to have bounced again. Last month, Australian property prices jumped up by 1.2%.
💡Generally, an increase in the cash rate leads to a decrease in home property values. Make sense right?
💡But thinking about the property market with just two variables (ie cash rate, and property prices) is little bit simplistic.
💡 There are a whole range of factors that can influence property prices - outside of just the cash rate.
So the RBA can do as much as humanly possible to slow down the property market, inflation and overall spending, but they really only have one lever at their disposal.
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