As expected: Cash rate remains low at 2.5%

102The official cash rate (OCR) has been left unchanged at 2.5 per cent, according to an April 1 statement from Reserve Bank of Australia Governor Glenn Stevens.

With pressure on Sydney housing stock and new residential lots continuing to drive up house prices, investors remain in a comfortable position.

Those who currently own investment property in Sydney may continue to see interest from residents seeking quality rentals, given the market is proving difficult to enter as a first home buyer, despite the low cash rate.

However, for those who already have a foot on the ladder, it can be easier to capitalise on the low OCR by using the equity from existing properties in order to purchase further dwellings that will appeal to a wide variety of tenants.

Comments from the Reserve Bank

Australia’s below-trend growth during 2013 was highlighted by Mr Stevens.

That said, consumer demand was “slightly firmer” over the summer. Furthermore, solid expansion in residential dwelling construction is anticipated, which could pave the way for purchasing opportunities among investors, as well as giving existing homeowners the chance to upgrade.

Growth in wages has dropped, while labour demand remains weak. This has pushed unemployment up to 6 per cent as at January 2014, according to the Australian Bureau of Statistics.

Interest rates are still very low, which is beneficial for those looking to secure credit for property in Sydney and other booming capital cities.

“Savers continue to look for higher returns in response to low rates on safe instruments,”┬ánoted Mr Stevens.

Opting for a diverse portfolio, including rental properties as well as shares or bonds is one way to ensure risk is spread. When it comes to buying homes or units, buyers will be able to make the most of the low interest rates on mortgage products.

As was stated in the last Monetary Policy Decision, a period of stable interest rates is expected.

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