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A cash rate gift just in time for Christmas

By Greg Bell

What's on the Christmas wish list for your retail or industrial organisation on the Gold Coast? While we're sure a million dollars and a new car are probably on the list of most, a more realistic item that may crop up often is financial stability. After all, you can't run before you can walk, and having steady economic ground beneath you is one of the first steps to expanding your commercial business.

The Reserve Bank of Australia (RBA) may not look much like Santa Claus, but they've acted like the man in red in this situation. By holding the official cash rate steady at 2 per cent for the seventh month in a row, there could be ongoing certainty around interest rates that puts a smile on Gold Coast business owners' faces this silly season.

A sign of things to come?

As the RBA board doesn't meet in January, this means the official cash rate is going to stay put well into the new year, with the first potential change taking place in February. And according to some industry voices, a February cut is definitely on the cards.

John Cunningham, President of the Real Estate Institute of New South Wales remarked on the 1 December statement in a media release, noting that "this decision adds weight to a good stabilisation of the market into the New Year".

"Many experts now believe interest rates will fall again in early 2016," he added, but was also quick to point out that some lenders still raised interest rates in 2015 when the cash rate stood still. This includes Westpac, who in October stated that rates on variable and fixed mortgages were going up due to rising capital requirements. There is also the matter of the Australian Prudential Regulatory Authority (APRA), whose guidelines have pushed lenders to reduce the amount of investment lending given out in 2015.

That being said, the prospect of another cash rate cut in 2015 might kick start growth once again – just what Gold Coast retailers will be hoping for.

Economy remains in solid shape

For now, RBA governor Glenn Stevens seems to be pretty pleased with the state of the economy. He noted in the 1 December statement that "the prospects for an improvement in economic conditions had firmed a little over recent months", and that growth which was previously concerning has actually balanced out a bit.

As for the commercial real estate market, he added that "prices for commercial property have been supported by lower long-term interest rates, while equity prices have moved in parallel with developments in global markets".

This suggests a positive outlook for people looking to buy industrial property on the Gold Coast, and the stability afforded by the RBA's month off gives buyers, developers and investors time to take a look at the current stock situation.

The strength of the Australian dollar may also play a role in the performance of the Surfers Paradise commercial market. A lower currency value may entice foreign investors to pick up local stock, and Mr Stevens stated that it is adjusted to recent drops in our commodity prices. The national dollar is currently worth around 72 US cents, so prospects for this remaining stable are good. 

Ask the experts

If the cash rate has put a spring in your step and you think it's time to get involved with commercial real estate on the Gold coast, come and talk to us at Ray White Surfers Paradise. We can link you up with a huge range of property options that can serve your specific needs. 

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