The Reserve Bank of Australia has resisted temptation to slash interest rates to another historic low, but has flagged the possibility of cuts in the near future.
The official cash rate remains at 2 per cent, despite the big four major banks hiking their interest rates in recent months.
RBA governor Glenn Stevens said board members were keeping an eye on the inflation outlook, which may provide scope for future cuts.
"The board will continue to assess the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflations consistent with the target," Mr Stevens said.
QWest Paterson chairman Warwick Hemsley said the decision was disappointing for the local market, which had been on a downward trend for the past 12 to 18 months.
“Obviously the RBA can’t make it’s decision based on the condition of one state’s property market, however in the last month or so Sydney and to some extent Melbourne have also come off the boil,” he said.
“The level of interest in the market from investors as well as owner-occupier buyers has declined in recent months due to tighter lending conditions and higher variable interest rates."
On a national perspective, CoreLogic RP Data head of research Tim Lawless said the RBA was likely comfortable with recent data flowing from the housing market, as capital gains in Sydney and Melbourne were easing, and dwelling approvals remain bouyant while investor activity cools.
But Mr Lawless also acknowledged the potential for another cut.
"The recent out of cycle increase in mortgage rates will likely provide the RBA with some additional wiggle room when it comes to considering a rate cut either later this year or early next year," Mr Lawless said.
"If we do see official interest rates fall over coming months, there is a high likelihood that the full cut won’t be passed on to borrowers, considering the higher capital requirements placed on residential mortgages by the prudential regulator, APRA.
"With the cash rate remaining on hold, and considering the recent 15 to 20 basis point lift to mortgage rates, the average discounted variable mortgage rate is likely to remain around the 4.8 to 4.85 per cent mark for owner occupier mortgages, which is close to historic lows."
