• Nick McGuire

Reserve Bank Cuts Rates to 1.5%

The Reserve Bank of Australia (RBA) cut interest rates by 0.25% to a fresh record low of 1.5%, as expected by the market. Prior to the decision, the RBA had held rates steady at 1.75% since May 2016. Markets currently anticipate rates to remain on hold for some time after yesterday’s decision.

In his statement following the decision, RBA Governor, Glen Stevens, highlighted his outlook for subdued inflation and a ‘modest pace of expansion in employment in the near term’. Governor Stevens weighed up the potentially stimulatory impact of a rate cut on the local housing market but outlined strengthened lending standards, some recent slowing in house prices growth and the outlook for a considerable increase in the supply of apartments in the eastern capitals in the next couple of years as mitigating factors.

Housing unaffordability has been problematic in the eastern states for some time. AEC analysis suggests high house prices have contributed towards high proportions of Australians living in these States experiencing severely and seriously unaffordable housing (defined as a region where median house prices equate to more than 4 times the local household income). In 2013-14, 73.3% of persons living in New South Wales, 64.3% of persons living in Victoria and 25.0% of persons living in Queensland lived in an area with severely or seriously unaffordable housing.

In addition to the factors outlined by Governor Stevens, regional development activities to stimulate high value jobs attraction into key population centres has the potential to assist in raising local household income levels and dampen housing unaffordability for local residents.

For more information on how AEC can assist you in generating new business investment and jobs to your region, please contact Nick McGuire, Regional Development on T: 0481 003 569 E: nick.mcguire@aecgroupltd.com.



The following section provides guidance on the methodology used to inform this study.

The following data were used to calculate the median multiple:

• Year Ending June 2014 Dwelling Prices

• Census 2011 Household Incomes by Local Government Area

• Gross Household Income, States, 2013-14

State mean gross household income for 2013-14 was allocated to local government areas based on their relationship to State average household incomes in the 2011 Census. This weekly rate of income was annualised to determine annual household incomes for each local government area in each State.

For each local government area, the median house price was divided by annual household income to determine the median multiple. For privacy and data validation reasons, any location with a house price less than $100,000 was excluded from the assessment.

The data reports on the overall local government area’s median house price. However, over the period of assessment dwellings would have been sold well above and below the published median. The local government areas data is not reflective of pockets of higher and lower house prices within the region.


ABS (2012). 2011 Census of Population and Housing. Cat. No. 2073.0, Australian Bureau of Statistics, Canberra.

ABS (2016). Household Income and Wealth, Australia, 2013-14. Cat. No. 6523.0. ABS, Canberra.

Demographia (2016). 12th Annual Demographia International Housing Affordability Survey: 2016. Rating Middle-Income Housing Affordability. Demographia, Australia

New South Wales Department for Family and Community Services (2014). Sales Tables June Quarter. Department for Family and Community Services, Sydney.

Queensland Department of Natural Resources and Mines (2016). Sourced through Queensland Treasury. Property Values. Office of the Valuer-General, Brisbane.

Victorian Department of Environment, Land, Water and Planning (2015). A Guide to Property Values, Annual Data and Analysis from Valuer-General Victoria 2014. Office of the Valuer-General, Melbourne.

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