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Published on December 4th, 2012

Key cash rate drops to 3%

After leaving interest rates on hold last month, the Reserve Bank of Australia acted today (December 4) by cutting interest rates to three per cent.

After reducing interest rates by 0.25 percentage points, governor of the RBA Glenn Stevens said that while many sectors weren't performing well, the real estate industry was not one of them.

He commented: "Available information suggests that the near-term outlook for non-residential building investment, and investment generally outside the resources sector, remains relatively subdued. Public spending is forecast to be constrained.

"On the other hand, there are indications of a prospective improvement in dwelling investment, with dwelling prices moving a little higher, rental yields increasing and building approvals having turned up."

the impetus for this decision came from falling company profits (down 2.9 per cent) and wages dropping (down 0.2 per cent) in the September quarter.

Job advertising in November fell by nearly three per cent while there was inactivity in the retail sector in October and property prices were flat in November.

Homeowners on a $300,000 may save an average of $600 a year as a result of this cut should the banks pass on the discount in full.

It comes as 77 per cent of real estate investors feel "very positive" about their investment, as stipulated in a new report.

The BRDC Jones Donald Australian private property investor study examined the mindset of 500 investors who had a stake in more than one piece of residential property.

Those who had their portfolio professionally managed were more likely to see a return than those who self-managed, with 51 per cent and 36 per cent respectively.

Even though over three-quarters were very optimistic – 42 per cent felt being a landlord has become increasingly trying.


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