Steady start to spring
THE RESERVE Bank of Australia has kept interest rates unchanged for the start of the spring selling ...
THE RESERVE Bank of Australia has kept interest rates unchanged for the start of the spring selling season but looks likely to deliver a cut by the end of the year, according to Australia’s leading real estate network LJ Hooker.
Chief executive officer Grant Harrod said today’s announcement shows confidence in both local and international economies despite a turbulent month for the stock market.
Slower property price growth, declining consumer sentiment and fall-out from the Chinese economy has made a reduction probable in the coming months.
``The Reserve Bank has shown in the past that it likes to sit on any kind of new events a bit longer than what is expected, however, the market is moving towards a cut,’’ Mr Harrod said.
``It’s a positive message today because it signals that they think the world is in a good place and it can be seen as a sign of confidence.
``If they cut when the market didn’t expect them to then that would be a problem, but now it is something that is highly anticipated by the end of the year.’’
Mr Harrod doesn’t believe lowering the cash rate will further fuel Sydney and Melbourne house prices.
Recent sales figures and auction clearance rates suggest some market softening, with listings slowly increasing as vendors try to bid to beat the traditional spring rush.
LJ Hooker agents have conducted a higher number of house appraisals over winter than usual, indicating there could be more stock coming onto the market before Christmas.
It is good news for homebuyers with the rate of growth in Sydney expected to fall to a more sustainable level, however, will still be higher than average.
``We are still going to see some spectacular sale results but I suggest that these will become a bit more one off – it will be property by property,’’ Mr Harrod said.
``There is a risk that vendor price expectations will see days on the market increase and auction clearance rates will come back, because they will be a bit of out step of with what is happening.
``Invariably buyers come within the first two weeks of your campaign, so if you don’t have your buyer or turn them away leaving your home on the market then people will start to question whether there is something wrong.’’
Mr Harrod believes quality lifestyle homes in Sydney and Melbourne will continue to attract a premium over spring. Affordability and employment opportunity in South-East Queensland is expected to drive migration north boosting price growth, particularly for freestanding homes around the Gold Coast.
The Western Australia, South Australia and Tasmanian markets will be benefit from the speculated future rate cut.
LJ Hooker National Research manager Mathew Tiller said while spring won’t be a ``buyer’s market’’, the availability of stock will make a difference to those who have missed out on purchasing due to strong buyer demand and low levels of listings over the past 18 months.
While a rate cut looks likely, he called on the Government to support monetary policy stimulus with confidence and productivity boosting reform combined with further spending on infrastructure.
“They need to look at fiscal policy measures that could potentially super charge any further interest rate reduction,’’ he said.