Rate cut could spur property market growth
Comments from a respected institution could serve to boost flagging confidence in the rural property market - with investment likely to make regional property a more viable long-term prospect.
With the Reserve Bank of Australia set to meet on Melbourne Cup Day (November 1) to decide on the cash rate, speculation on the effects of a reduction have spurred activity from savvy property fund managers who have been busy buying back shares from the market.
Stockland, Mirvac and Nexus have all been observed engaging in this speculative behaviour - with industry commentators not being surprised by the move.
Speaking to the Sydney Morning Herald on October 23, Deutsche Bank said that it expected some parties to further increase their consolidation efforts ahead of a rate cut, stating: "Subject to further asset sales, we would not be surprised to see the buyback expanded to 10 per cent of issued capital."
While these activities will not directly impact on the value of rural land prices in the short term, it could serve as an indicator that the big firms are anticipating a change in the interest rates and are gearing up to make some long-term strategic buys.
One such move that has already occurred is the purchase and resale of Australia's largest cotton farm - Avymore - by the National Australia Bank.