Australia Property News: Interest Rate Cuts and Auction Rates

The speculation is that tomorrow will see the RBA drop Australia's official rates of 1.25% - and that's what the the financial markets have priced in. Economists are more reserved though, a drop of that size would be the largest in history since the RBA started regulating official interest rates in 1990. With suggestions that the economy is already heading towards or in recession such a dramatic drop may not be necessary.

The interest drops have done nothing much for auction clearance rates:hey agents how can you still peddle auctions as the way to market a property in this market? The figures are nasty with Melbourne and Sydney still at close to the lowest rates for 12 months, although marginally up from last week. Adelaide clearance rates dropped sharply from the previous weekend's, and Brisbane was slightly up. Sydney's clearance rate was 42.6%, up 0.6% from last week's .

So the RBA is trying to drop rates to kick start the economy and what are the states doing with sales tax? Well reported that NSW has just hiked sales tax and now that analysis is that in fact that stamp duty rises way ahead of income: you know the tax that should have disappeared with the introduction of GST in 2000.

According to a BankWest study:

Home buyers were forced to set aside at least 20% of their annual household income to pay stamp duty in Sydney, Melbourne, Adelaide and Perth. Sydney and Melbourne buyers needed almost three months of salaries to pay stamp duty, while Brisbane had the lowest combination of rate and house prices with buyers there only needing to set aside 1 month's salary.

A $500,000 home in NSW would cost $18,174 in NSW, $23.411 in Victoria, $9810 in Queensland and $24,433 in South Australia.