- Michelle Hutchison, Finder.com.au money expert
The Reserve Bank of Australia decided to keep interest rates unchanged, in line with analysts' expectations, opting to hold rather than risk further fuelling house price inflation in Sydney. The RBA cut rates in May, referring to sluggish business investment and slowing Chinese growth, following an earlier cut from 2.5% to 2.25% in February. Yet, economists predict a further rate cut could be on the table in the central bank's August meeting. However, the RBA is reluctant to cut rates further, doubting the efficacy of further reductions.
The number of new homes approved for construction in Australia dropped sharply in April, though the decrease was caused by the volatile apartment segment. According to the Bureau of Statistics, 18,715 homes were approved in the reported month in seasonally adjusted terms, 4.4% fewer than in March. A 15% drop in the number of apartment approvals drove the decline. Yet, that was partially offset by a 4.7% gain in the number of house approvals to 10,130, reversing the recent dominance of apartments over houses. Monthly apartment approval figures are typically volatile due to the influence of large multi-unit projects. Last year apartment approvals have fluctuated by at least 5% every month, ranging up to a 31% advance in approvals last October.
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