The RBA’s decision to reduce official interest rates has been welcomed by various real estate industry professionals.
“This is welcome news for home buyers, particularly first home buyers; REIA hope the banks play their part and pass on the rate cuts in full,” said Real Estate Institute of Australia’s (REIA) Acting President, Pamela Bennett.
The RBA reduced the official cash rate yesterday by 0.25 per cent to 4.5 per cent.
The REIA said its June quarter data showed home owners were contributing 34.6 per cent of their income to monthly loan repayments, although this should now fall to 33.8 per cent as a result of the 0.25 per cent reduction.
Of the major banks, Westpac and the Commonwealth Bank of Australia (CBA) have announced plans to reduce their respective variable home loan interest rates by the full 0.25 per cent.
“If rate cuts are passed on, the average Australian mortgage holder will reduce their monthly repayments from $2237 to $2187; a saving of $50 per month,” continued Ms Bennett.
Brian White, chairman of the Ray White Group, said the rate reduction should see a swathe of relunctant buyers and sellers enter the market.
“There are many people on the sideline who have been awaiting a more favourable cash rate before engaging in the market and this, in turn, has been impacting other sectors of our economy,” he said.
"It's encouraging for the RBA to recognise that people need to feel secure in their property equity in order to spend elsewhere. When an individual buys a home they are effectively embarking on a long journey with the RBA."
L. Janusz Hoooker, CEO at LJ Hooker, told Real Estate Business late last week that it was the direction of the rate move that was critical.
“The RBA would typically not make a single move, they would move 100 basis points or they don’t move it at all,” he said.
“They have never in recent history moved it less than 100 basis points, so they will do a series of 25 or 50 basis point moves. But any direction at all would give the market a sense of where it is going and that will change the mood.”
Mr White said the property market had remained positive despite recent debate about interest rates.
“In terms of what we're experiencing as a company, we have continued to see a consistent volume of property transactions across the nation meaning Australians are still purchasing and listing property.
“At Ray White, we work on a barometer of consistently achieving over $2 billion in property turnover per month and this has occurred month on month now for some time.”