Low interest rates lure investors to homebuying

Low interest rates lure investors to homebuying

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As rental costs rise and interest rates continue to be more attractive, property investors may turn to homeownership, according to one data specialist.

“The rising rental costs and lower interest rates may, in certain areas, result in some renters now looking to enter into homeownership,” RP Data research analyst Cameron Kusher said.

“On the other hand, consumer caution persists and consumers broadly continue to prefer to pay down debt and shun new debt, which is likely to restrict any significant improvement borne through lower interest rates.”

Mr Kusher said the big wild card remains the global economy.

“There seems to be a likelihood of further interest rate cuts in the near future by the RBA, especially in light of the revelations of a slowing Chinese economy and a substantial decline in commodity prices, as well as the likelihood of much slower economic growth over the third quarter of 2012.”

The likelihood of further economic uncertainty is high, which will continue to dampen consumer confidence and willingness to spend on high commitment decisions like purchasing a property, according to Mr Kusher.

“As a result, any significant growth in values across the national housing market would appear to be some way off," he said. "The recent improvement in sales transactions will be vital to a sustainable return to value growth across the country. However, it will need to be maintained for a number of months before there is evidence to proclaim a recovery.”

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