Record Low Rate to Fire up Pre-Spring Market
Interest Rates, Stock, Buyer Demand and What it Means for Sellers
The Reserve Bank’s decision to cut the cash rate to a new record low, combined with capital city price growth, will spur listings ahead of the spring selling season, according to leading real estate network LJ Hooker.
Low CPI data of one percent released last week influenced the RBA board’s decision to lower the official cash rate to 1.5 per cent.
The stimulus measure comes as CoreLogic reported the number of listings on the market in July was 16 per cent below the same month in 2015.
LJ Hooker’s CEO Grant Harrod said the shortage of stock had underpinned price growth in the NSW and Victorian capitals over the past quarter with CoreLogic reporting Sydney’s median house price increased 5.6 per cent in the quarter to June, while Melbourne rose 3.5 per cent.
“There’s a sharp lack of stock on the East Coast. Auction results in Sydney and Melbourne have been consistently north of 70 per cent showing the buyer demand is still very healthy,” said Mr Harrod.
“We’re now a month away from the peak selling season and the RBA’s move will motivate buyers even further. Most pundits thought Sydney and Melbourne’s price growth would slow over the year – especially over winter. But very few anticipated the levels of new stock would be so low.
“There’s plenty of room in the market for sellers wanting to list now; more listings will actually bring greater levels of sustainability to the market. The LJ Hooker network is already talking to sellers wanting to beat the spring rush.”
New listings for July were down approximately 32 per cent in Sydney and 18 per cent in Melbourne year on year.
LJ Hooker’s Head of Research, Mathew Tiller, said elsewhere in Australia the rate cut would be received differently, especially in Western Australia.
“The cut will help the Perth market because they’ve had softer buyer demand,” said Mr Tiller. “The cut should create a tipping point for affordability in Perth which could result in some of the current stock levels being absorbed.
Grant Harrod is the Chief Executive Officer at LJ Hooker, Australia’s number 1 real estate network. Follow him @harrod_grant