On the day the Australian share market went into freefall, the Reserve Bank of Australia (RBA) decided to keep the official cash rate on hold.
It is now 19 months since Australia’s central bank has changed gears on monetary policy. The last move was a 0.25% cut in August 2016
As the central bank was taking its steady as she goes approach to Australia’s monetary policy on Tuesday 6 February, it was a bloodbath for the share market. The benchmark S&P/ASX200 share market index plummeted 192.9 points or 3.2%. This correction represented a $60 billion loss in value and $90 billion loss in two days.
It was the worse day in three years for shares and puts the January fall for Sydney real estate prices of 0.9%, according to CoreLogic, into perspective.
Given the volatile ride that equity market investing brings, it’s little wonder Australians gravitate to bricks and mortar to build long-term wealth, noted Angus Raine, Executive Chairman Raine & Horne. “Australia’s love affair with real estate is worth an estimated $6 trillion at last count,” said Angus. “This massive pool of capital towers over other asset classes such as shares, a fact our politicians and bureaucrats would do well to remember in the leadup to the next Federal Election.”