The only way is down for interest rates

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All that stands between lower interest rates come the next Reserve Bank Board meeting on August 6, is next week’s consumer price index report and the Australian dollar. If inflation remains low and the Australian dollar does not drop a lot further – say to the mid-US80c level - the RBA may well cut rates again.

But why?

Despite the tentative signs of improvement in the housing sector, the upturn still remains quite gradual. Neither investors, first homebuyers or existing owners seeking to move, are rushing back to the market – in large part because overall household debt levels are already quite high. High land and development costs are also holding back new activity.

In turn, that means the upturn in house prices has been modest to date, as has the lift in demand for new homes.

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