Reserve Bank of Australia decided to raise the cash rate

The Board decided to raise the cash rate by 25 basis points to 3.25 per cent, effective 7 October 2009.

The global economy is resuming growth. With economic policy settings likely to remain expansionary for some time, the recovery will likely continue during 2010 and forecasts are being revised higher. The expansion is generally expected to be modest in the major countries, due to the continuing legacy of the financial crisis. Prospects for Australia’s Asian trading partners appear to be noticeably better. Growth in China has been very strong, which is having a significant impact on other economies in the region and on commodity markets. For Australia’s trading partner group, growth in 2010 is likely to be close to trend.

Sentiment in global financial markets has continued to improve. Nonetheless, the state of balance sheets in some major countries remains a potential constraint on their expansion.

Economic conditions in Australia have been stronger than expected and measures of confidence have recovered.  Some spending has probably been brought forward by the various policy initiatives. As those effects diminish, these areas of demand may soften somewhat. Some types of capital spending are likely to be held back for a while by financing constraints, but it now appears that private investment will not be as weak as earlier expected. Medium-term prospects for investment appear, moreover, to be strengthening. Higher dwelling activity and public infrastructure spending is also starting to provide more support to spending. Overall, growth through 2010 looks likely to be close to trend. Read the rest »

RBA decided to leave the cash rate unchanged at 3.0 per cent

The global economy is stabilising, after a sharp contraction in demand during the December and March quarters.  Downside risks to the outlook have diminished, with conditions in global financial markets improving this year and action to strengthen balance sheets of key financial institutions under way. Growth in China has strengthened considerably, which is having an impact on other economies in the region, including Australia.  Read the rest »

First Home Owners Grant Extended

FHOG  for both new and existing homes extended and an introduction to phase the Boost out gradually. The Commonwealth Government has made an accurate and overall assessment of the property market in their decision to extend the FHOG Boost for six more months, however, it will only continue at the full rate until 30 September 2009.

From October until December 2009 the FHOG Boost will be reduced from $14,000 to $10,500 for established homes and from $21,000 to $14,000 for newly constructed homes.

This decision will benefit the property industry greatly and have tremendous flow-on effects to those in the business of servicing the property industry such as solicitors, conveyancers, financiers, valuers, removalists, furniture suppliers and a range of trade’s people.

Source: Real Estate Institute of Australia