South Gladstone for Real Estate.
South Gladstone for Real Estate. Mike Richards GLA120117RESG

RBA rate cut expected to trickle into local economy

THIS week's interest rate cut by the Reserve Bank of Australia, albeit minor, will eventually flow through to the local economy according to Real Estate Institute of Queensland Gladstone chair Alicia Williams.

On Tuesday, the board of the RBA decided to lower the cash rate by 25 basis points to 1.25 per cent.

The RBA said they "took this decision to support employment growth and provide greater confidence that inflation will be consistent with the medium-term target".

It also cited "the central scenario remains for the Australian economy to grow by around 2.75 per cent in 2019 and 2020.

"This outlook is supported by increased investment in infrastructure and a pick-up in activity in the resources sector, partly in response to an increase in the prices of Australia's exports," the RBA's statement said.

Ms Williams said recent softening of the real estate market in metropolitan areas, combined with the rate cut - the first cut since August 2016 - would eventually impact our economy.

"Obviously Gladstone has been against the grain in terms of economic performance and the property market compared to bigger areas like Brisbane, Sydney and Melbourne," Ms Williams said.

"The fact they are starting to soften is probably a bonus for regional areas like Gladstone - where we have come out of a correctional period and starting to recover - because those interest rate cuts, even if they are minor, will help keep cash in our local economy.

"It will help make it more affordable for people to continue to make their repayments and also have more of a discretionary spend in the local economy as well which helps boost business and the overall supply chain of the region."

Ms Williams didn't expect a rush of people queuing at real estate agents' doors following the rate cut at this stage following the announcement.

"It's not something that happens straight away and it's not like it is dropping one or two per cent, which would be a very large-scale reaction, but it takes a little bit of time," she said.

"When rate drops and economic stimulus comes through it takes time for the cash flow to be absorbed into the market place.

"If you have a small saving it's not going to mean big things for you straight away, but it's about majoring in those minors - small steps towards a greater goal."