RBA continues to hold tight
Homeowners considering listing in this spring selling season should be eyeing slowing price growth instead of monetary policy, said LJ Hooker CEO Grant Harrod.
The Reserve Bank of Australia Board decided to maintain the official cash rate at 1.5 per cent today – a record low – as price growth in the nation’s largest market, Sydney, slows.
Mr Harrod said the impact of cash rate changes on the property market was beginning to wane, with the number of properties for sale remaining uncharacteristically low in 2016.
“The market has been exposed to an extended period of quantitative easing, but it’s not inspiring property owners to sell,” said Mr Harrod. “It’s more likely to be major markets such as Sydney approaching their peak in growth which will force their hand.
“Five to 10 years ago, if you asked the marketplace what would be the biggest influence on their real estate decision, interest rates would have been the answer. But after an extended period of low rates, interest rates have become less persuasive.’’
Figures released from the Australian Bureau of Statistics last month showed Sydney residential prices rose 3.6 per cent for the year to June. The moderate growth pales to the city’s 2014-15 June result - where prices rose 18.9 per cent - and was behind Melbourne (8.2), Canberra (6.0), Hobart (4.9) and Brisbane (4.3).
Overall, the weighted index for the eight capital cities rose 4.1 per cent in the year to June. In comparison, the previous 12 months recorded 9.8 per cent across the capital cities.
“At the RBA’s September meeting, it pointed to signs of a cooling in the market. There has been an increase in properties come to the market this spring selling season, and that will likely soften further growth as demand is satisfied,’’ said Mr Harrod.
“If sellers are motivated, the indicators show we’re nearing the top of the peak – sitting on hands could prove to be costly. Buyers are very smart and vendors have to measure their expectations or else they will spend a extended period on the market.’’
Mr Harrod said the nation was operating on a multi-tiered pace, pointing to Perth, which had more stock currently available than Sydney.
Mr Harrod said the RBA’s November ‘Melbourne Cup’ meeting was a popular time for the central bank to shift rates, with their gathering coinciding with the release of the latest inflation data.