How will the RBA's rate decision affect the Canberra property market?

Canberra mortgage holders can breathe a sigh of relief as the steepest and fastest interest rate cycle on record finally looks to have peaked.

The Reserve Bank of Australia (RBA) held the cash rate at 4.1 per cent on Tuesday after a third consecutive drop in inflation.

“The economy seems to be tracking along more or less where the RBA predicted it would at the very least,” BIS Oxford Economics head of macroeconomic forecasting Sean Langcake said. “I think they’ll be comfortable leaving rates on hold for quite some time.

“I think this is the peak. Chances are we have reached the end.”

Canberra’s property market could see more benefit than other Australian cities, as most had already begun to see property-price recoveries after months of falling medians, Domain chief of research and economics Dr Nicola Powell said. 

“The impact could be quite changing in Canberra in terms of a change of sentiment,” Powell said.

Canberra’s median house price did not change in the June quarter, holding at $1,034,057, but that was 11.9 per cent less than its highest point a year earlier. 

“It’s one of those cities that actually saw the deepest declines – it was Canberra and Hobart – from their price peak,” Powell said. 

She said interest-rate stability meant both sellers and buyers in Canberra would likely gain confidence in their property moves, something that had been lacking during the onslaught of rate increases.  

“When you’re talking about transacting a property, we know that decisions become delayed; they don’t become changed,” Powell said. 

“The timing is pretty perfect for that stability going into the spring selling market.” 

The monthly consumer price index (CPI) fell to 4.9 per cent in July – down from 5.4 per cent in June – and annual inflation sat at 6 per cent, still outside of the RBA’s target range.

While the economy was recovering and general consumer confidence had increased, economists suggested the next cash rate move would likely be a cut – but not immediately. 

“It’ll be a very long time before we see rate cuts – maybe the very end of 2024 at the earliest,” Langcake said.