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Does a stable cash rate impact Gold Coast business?

By Greg Bell

Month in month out, the Reserve Bank of Australia (RBA) unveils the official cash rate. It tends to shape growth in the economy by stimulating investment. On top of this, it can bait banks into reducing or increasing their interest rate. For example, when the RBA cut the rate in February this year, lenders like ANZ were extremely quick to reduce interest rates on mortgages.

It made for an ideal situation when it came to investing in commercial property for sale in Surfers Paradise, but the tables have turned somewhat. Lenders have been increasing interest rates, particularly on investment home loans. This isn't ideal, but it also isn't the end of the world. As CoreLogic RP Data Head of Research Tim Lawless noted in a response to the November RBA announcement, interest rates on some mortgages (generally owner-occupier) are still near historically low levels. 

But what about business activity? Housing isn't the only thing the cash rate affects, and anyone looking to lease commercial property on the Gold Coast will pay attention to a wide range of variables.

Our dollar goes higher

Writing for the National Australia Bank on November 4, Raiko Shareef noted that the Australian dollar edged higher after the RBA announcement, which stated that "the prospects for an improvement in economic conditions had firmed a little over recent months".

Shareef says this positive language influenced the strength of the dollar, but is it going to stay this high? If it does, there could be more cuts to the cash rate in the pipeline. Back in August, Shane Oliver from AMP wrote that reductions in the cash rate will help to bring the dollar down, which helps a lot of industries including tourism, farming, manufacturing and education.

Tourism is something that has a strong bearing on those who lease commercial property, especially retail leasing on the Gold Coast. The 2014 Gold Coast Tourism report showed that total international expenditure was up 11 per cent on 2013, but if the AUD stays elevated, there could be negative impacts for tourism and the local industry.

With this in mind, some people after commercial property in Surfers Paradise might be hoping for a cash rate cut in the near future. 

Inflation isn't going wild

Another economic indicator tied to the cash rate decision is inflation. According to Mr Stevens, "inflation is low and should remain so, with the economy likely to have a degree of spare capacity for some time yet". While this might not be excellent for overall growth in the economy, it could mean operating costs won't blow up for operators of commercial property on the Gold Coast

Overall, markets seem to be less volatile, and there could even be some growth in business confidence with this ongoing stability. The latest ANZ Business Outlook Survey showed confidence among Australian companies rushing into the positive area of the index, which bodes well for the coming months. Profit intentions were up, and investment potential also recorded a sharp increase.

If operational costs stay low and the cash rate continues to work in favour of businesses, it could be a great time to start looking at commercial real estate on the Gold Coast. Whether it's investment in a new industrial site, leasing a new retail shop front in Surfers Paradise or even an office expansion, the possibilities are endless – especially when you work with Ray White.

We have an expansive network that stretches up and down this part of the country, which gives you access to a huge range of developments and excellent advice on investment and commercial leases that suit your financial goals. 

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