RBA holds rates steady as house prices climb

The Reserve Bank has held official interest rates steady in the face of soaring house prices across the country.

Following its meeting this afternoon, RBA governor Philip Lowe said the official cash rate would remain at 0.1 per cent. The bank cut the cash rate to its current record low in November and has signalled it will remain there until at least 2023.

The bank has signalled it will hold the cash rate steady until at least 2023.Credit:Nicholas Rider

Markets had expected the bank to keep rates steady.

The decision followed figures from CoreLogic showing a further lift in national house values. Dwelling values lifted by 2.2 per cent in May, after a 1.8 per cent jump in April and a 2.8 per cent increase in March.

Sydney’s median house value increased by 3.5 per cent in the month to $1.186 million while in Melbourne it climbed 2.2 per cent to $908,000.

So far this year, Sydney’s median value has increased by 15.1 per cent. Over the past 12 months, Darwin’s house values have soared by 21.1 per cent.

Separate figures from the Australian Bureau of Statistics suggest Wednesday’s national accounts will show the economy growing extremely strongly through the first three months of the year.

Inventories increased by 2.1 per cent in the March quarter and will add about 0.7 percentage points to GDP. Net exports, which analysts had tipped to reduce GDP by up to 1.1 percentage points, were stronger than expected and are now forecast to cut growth by only 0.6 percentage points.

More to come

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