Interest rates on hold for another month

Interest rates on hold for another month.  As usual the announcement was reported as good news for households and a huge relief for the struggling property market. But when I heard the announcement on Tuesday it made me wonder if the already cautious consumer will see it as good news or bad news?  Good to know that the cost of money won’t rise but bad in that it reflects a less than buoyant economy.

Unfortunately I’m not sure it will have much of an impact on the property market in the short term.  A recent Newspoll found ‘35 per cent of respondents expected their standard of living to get worse in the next six months’ and that negative sentiment is definitely flowing through to decisions about property. I think the outlook really depends on whether you’re a ‘glass half full’ or ‘glass half empty’ type of person.  Interest rates on hold, prices steady and optimists are excited about the opportunity to do a deal while others are depressed that property values aren’t what they used to be.

I was taken with a comment by Ross Gittins in the Sydney Morning Herald at the start of the week when he said “the gloomy talk doesn’t fit with the objective indicators.  Will we snap out of it, or could we talk ourselves into genuine poor performance?” In other words we should be careful what we wish for!