Rate cut unlikely to send property market surging

Matthew Sullivan

It could take up to nine months before the Reserve Bank’s November rate cut will have any effect on buyer confidence and the property market, Realmark director John Percudani said.

“Generally speaking, when interest rates do come forward the impact has always had a bit of a lag in it,” Mr Percudani told Real Estate Business.

“It is six to nine months, or two to three quarters before it [a rate adjustment] actually manifests itself into the community.”

Mr Percudani was responding to the recent Real Estate Business Sentiment Survey, which revealed 44.4 per cent of the 358 respondents didn't expect the then 4.75 per cent official cash rate to have an impact on the property market in the three months to December. The survey, which was undertaken before the November 1 rate cut, also found that 31.6 per cent of respondents believed the 4.75 per cent rate would have a negative impact on the property market.

Yet, even with the recent Reserve Bank rate cut, most respondents - 64 per cent - to the latest Real Estate Business straw poll still believed the RBA’s rate cut would have little to no effect on property sales.

Michelle Harvey, director of hockingstuart Mooroolbark and recent winner of the Real Estate Institute of Victoria 2011 ‘Small Residential Agency of the Year’ award, believes it will take a lot more than a 25 basis point rate cut to significantly stimulate the property market.

“I do not believe it will have a huge effect like some economists are claiming but it may be a bit early to tell,” Ms Harvey told Real Estate Business.

“If the RBA backs up the November rate cut with a similar move in the near future, than we will see more confidence in the property market, but I don’t expect to see much change now.”

Matthew Sullivan

It could take up to nine months before the Reserve Bank’s November rate cut will have any effect on buyer confidence and the property market, Realmark director John Percudani said.

“Generally speaking, when interest rates do come forward the impact has always had a bit of a lag in it,” Mr Percudani told Real Estate Business.

“It is six to nine months, or two to three quarters before it [a rate adjustment] actually manifests itself into the community.”

Mr Percudani was responding to the recent Real Estate Business Sentiment Survey, which revealed 44.4 per cent of the 358 respondents didn't expect the then 4.75 per cent official cash rate to have an impact on the property market in the three months to December. The survey, which was undertaken before the November 1 rate cut, also found that 31.6 per cent of respondents believed the 4.75 per cent rate would have a negative impact on the property market.

Yet, even with the recent Reserve Bank rate cut, most respondents - 64 per cent - to the latest Real Estate Business straw poll still believed the RBA’s rate cut would have little to no effect on property sales.

Michelle Harvey, director of hockingstuart Mooroolbark and recent winner of the Real Estate Institute of Victoria 2011 ‘Small Residential Agency of the Year’ award, believes it will take a lot more than a 25 basis point rate cut to significantly stimulate the property market.

“I do not believe it will have a huge effect like some economists are claiming but it may be a bit early to tell,” Ms Harvey told Real Estate Business.

“If the RBA backs up the November rate cut with a similar move in the near future, than we will see more confidence in the property market, but I don’t expect to see much change now.”

promoted stories

REB Events