Despite cash rate move, prices not an issue outside of Sydney

By James Brown

Any decision by the Reserve Bank of Australia (RBA) to keep the cash rate at an all-time low ought to be greeted with cheers and celebration. After all, it means it's more affordable to buy property in Burpengary, Deception Bay, Morayfield and surrounding areas. 

However, the RBA's monthly decisions also tend to prompt some concern about what that means for the property market. If the RBA is keeping interest rates low, does that mean houses are too unaffordable in Australia?

Home unaffordability a Sydney issue, not an Australian one

Despite concern around housing prices, Loan Market chairman Sam White said in a 7 July statement that the RBA's decision was prompted by conditions in Sydney – not the country as a whole. 

"We don't have a property price problem in Australia – what we have is a very strong market in Sydney," he explained. 

"Those who don't live within 50 kilometres of the centre of Sydney – especially those who don't live in NSW  will be wondering what all the fuss is about."

Indeed, RBA governor Glenn Stevens' statement announcing the decision made that clear. Along with recent events in Greece and China and the slowing growth of the Australian economy, Mr Stevens specifically mentioned property prices in Sydney for mention as one of the factors influencing the board's decision. 

The conditions pushing prices up in Sydney certainly don't appear to be present across the board, when one looks at the figures. The CoreLogic RP Data Home Value Index for June showed that Brisbane's median house price is sitting at $455,000, markedly affordable compared to Melbourne and, especially, Sydney. 

Though future cash rate decisions may prompt further concern about the market, these facts suggest real estate in Narangba will continue to be in reach for many buyers.

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