While a rate cut is good news for homeowners and investors, I'm cautious about property being used to stimulate the economy following the post-mining boom.
More time is needed to see if historic low interest rates are impacting on property markets outside of Sydney and Melbourne. The Reserve Bank of Australia’s decision to wait for May’s cut to influence the economy was sensible, despite weak business investment figures. An interest rate cut is now more likely at the end of the year, if needed, to stimulate the economy.
We haven’t seen any signs but it is too early to call if it’s had any positive effect in cities such as Perth and Canberra - it could take another three to six months. In Sydney, a lack of listings combined with historic low interest rates are continuing to bring record numbers of people to open inspections and push up property prices.
It has evolved as a unique market and is likely protected from any ‘bubble’ due to a lag in DA approvals to match population growth. The biggest issue facing all agents at the moment is the lack of listings and the proliferation of buyers. The total number of properties available for sale across the LJ Hooker network is down by about five percent and the industry has dropped 5.5 percent. It is no longer unusual to see 100 groups inspecting a property over a four week auction marketing campaign, such is the demand.
While a rate cut is good news for homeowners and investors, I'm cautious about property being used to stimulate the economy following the post-mining boom. We are at historic record lows and if businesses aren’t out there investing it is not because rates are not low - it is because of confidence, and that comes back to the Government.
They need to build infrastructure and policies that will show businesses there will be future economic growth so they will go out and invest. Infrastructure is also good for the property market and we are currently seeing this in Sydney with demand for housing along the North West Rail Link.
The winter market offers a good opportunity for buyers who have been sitting on the fence wanting to sell, but who are too afraid they won’t be able to afford their next property. The old adage of ‘don’t buy until you have sold’ - which is how the world used to work - has now changed to ‘don’t sell until you have bought’, and that is affecting the market. If anyone wants to sell to maximise the value of their home then they should be talking to their local real estate agent now, because there is a strong chance when we come into spring there will be a lot of competition.