Too early for cut after bankhire
A DECISION to keep interest rates on hold will help the property market adjust to more normal conditions following a period of extended strong growth, according to the nation’s leading property network LJ Hooker.
Grant Harrod, LJ Hooker CEO, said the Reserve Bank of Australia’s announcement today to leave rates unchanged is not surprising, despite calls from the retail sector to cut them in time for Christmas spending.
“While there is good argument for a reduction they will want to see the impact of recent rate increases by the four major banks,’’ he said.
“It is a tricky situation for the RBA. They haven’t seemed to be reactive to short term decisions and they will want to have some time for analysis and to monitor conditions in Sydney and Melbourne before acting.
“It is probably just too early and they won’t want to be boosting bank profits as there is no guarantee now that they would follow the RBA.’’
A surge of listings over spring has steadied prices in parts of Sydney, but Mr Harrod believes ongoing buyer demand will keep the market active over summer.
This is expected to see higher sales volumes and strengthening regional markets over the coming months.
“We are hearing from our offices that they are starting to get more stock and the tightness of listing is dissipating,’’ Mr Harrod said.
“As much as consumers want to sell their property at the top of market they don’t necessarily want to buy in that same market.
“People can no longer buy, flip a house in a couple of weeks and then sell with a profit but if you bought a home five years ago, you are still going to enjoy strong returns and there will be a better selection of properties coming up for sale.’’
Mr Harrod expects the market will have a ``soft landing’’ as it eases into more normal buying and selling conditions.
“It doesn’t mean people won’t put their property on the market, to the contrary, they haven’t listed because they can’t find their next place,’’ he said.
“With more choice, they will be encouraged to put their home up for sale and this will keep up the demand.’’
LJ Hooker National Research Manager, Mathew Tiller, said buyers are more educated than in previous housing cycles with access to sales data, which is also influencing the market.
“It has probably made it a more “truer” cycle because it makes it harder to get a sale that is out of line with the market because people do know what the property down the street sold for,’’ he said.
“They do their research and have the information at their fingertips, they definitely know their numbers.’’