Interest rates are likely to remain at low levels throughout 2013, helping to lift an otherwise sluggish property market out of the doldrums over the next 12 months.
In a research paper released by PRDnationwide Research, the company said while 2012 was a challenging year in real estate, the market was set to improve next year.
The paper was released after the Reserve Bank of Australia’s decision yesterday to reduce the official cash rate by 25 basis points to three per cent.
“While it is not uncommon for many regions across Australia to have observed almost half the number of sales recorded than from five years prior, the tide appears to have turned over the final quarter of 2012,” the paper said.
“Many of our local sales offices have noticed an improvement in the amount of prospective buyers, with buyer enquiry levels up, and in many cases these enquires have transformed into sales.”
The paper added that the rate of decline in property values has slowed and in several regions ceased, with other regions improving.
“Latest figures from the RPData-Rismark Monthly Home Value Index have shown that Sydney, Perth, Darwin, Canberra, and Brisbane (including the Gold Coast) have all experienced positive growth over the 12 month period ending November 2012. The city to have experienced the biggest improvement in dwelling values was Darwin, climbing by over 13 per cent.
“Interest rates will almost certainly be kept at low levels throughout 2013, assisting in keeping home loans at more affordable levels from five years prior. The past year has already observed extremely low fixed rates, with October’s average three year fixed rate at 5.55 per cent, its lowest rate since pre-1990.
“Employment across Australia remains in check (except for Tasmania), with October’s Australian rate at 5.2 per cent, down from the previous month by 0.3 per cent,” the paper continued. “These fundamental economic indicators are likely to remain favourable for the property market throughout next year, and should assist in a strengthening level of buyer confidence.”
Real Estate Institute of NSW (REINSW) chief executive officer Tim McKibbin said yesterday’s cut in interest rates was a very responsible decision by the Reserve Bank.
“The Reserve Bank has recoginsed that a cut in interest rates will help to stimulate the property market and the overall economy. The property market is the engine room of the economy and this reduction in interest rates will provide flow on benefits to other sectors."
REIQ CEO Anton Kardash said the rate reduction, the fourth this year, was helping to maintain confidence in the market.
‘‘The Queensland market has been improving throughout this year, which can partly be attributed to lower interest rates,’’ he said. ‘‘More importantly, though, confidence levels have improved and pent-up demand is starting to be released through increased sales activity.
REISA president Greg Moulton said recent rate cuts had helped the market. “Bit by bit, these small rate cuts over the past 12 months have started to attract people back to buying property so we are confident that today’s cut will have an impact on the market.”