Market Watch: Markets predict another interest rate cut

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Money markets convinced of another interest rate cut
Will today bring another cut to the already record-low Reserve Bank of Australia interest rates? The money markets think so. ABC News reports that the markets are factoring in a 78 per cent chance that rates will be cut from the current 2.25 per cent, probably to 2 per cent. Despite the latest home prices figures from CoreLogic RP Data showing a 3 per cent growth in prices in Sydney in March and almost 14 per cent in a year, analysts believe that other aspects of the economy need the stimulus of a further rate cut. The mining industry in particular would benefit from the rate cut further weakening the Australian dollar. AMP Capital Investors chief economist Dr Shane Oliver told the AM programme that concern over a housing bubble is confined to Sydney and the RBA will have to consider the bigger picture.
Source: ABC

No price crash according to the figures
Low interest rates and rising prices in Sydney and Melbourne are not about to cause a burst housing bubble or price crash. The Weekend Australian reports that there has been “no major crash in value” since 1965 when data was first collected. There was a dip between March 2004 and December 2005 but it was 9 per cent. There has been talk of the housing market being 30 per cent overvalued but with building of new homes set to gradually ease the pent up demand for housing many analysts expect a slower pace of price growth.
Source: The Australian

Sydney parents pay extra to give their kids separate rooms
Families are paying premium prices for homes on the fringes of Sydney in order to give children separate rooms. While apartment living may be cheaper and closer to amenities, families with more than one child want them to be in their own rooms and it’s driving up suburban prices. CoreLogic RP Data figures show a price increase over the past 12 months of 12.8 per cent adding $85,000 to the median house price. Australian Bureau of Statistics data shows that there are now 75.4 per cent of families where each child has their own room, up from 70 per cent in 2000.
Source: Daily Telegraph

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