The property market is gathering strength, and the latest interest rate cut should only stimulate demand further, two senior industry figures have claimed.
“I am conservative by nature but all the evidence is pointing in the one direction and that is the property market along the east coast of Australia is starting to move again,’’ said Professionals Real Estate Group chief executive officer, Glyn Morgan.
“It does not matter if you are looking at information from auction clearances, sales through RP Data, the Australian Property Institute or from valuers such as Herron Todd White, the research is all saying the same thing ... the market is on the improve.
“Auction clearance rates have improved, RP Data has reported price growth in Sydney and Melbourne, API is reporting that Brisbane and Sydney prices are rebounding and Herron Todd White says property prices on the east coast market are set to rise.
“This is exactly what our members, who work at the coal face, are mostly all saying.
“Attendances at open homes are rising, the number of serious buyers is increasing as people become more confident about the market and in some market there is actually a shortage of supply emerging.”
Mr Morgan's comments are supported by the latest numbers from RP Data, with capital city dwelling values rising by 1.4 per cent over the month of September – the largest month-on-month rise recorded since March 2010.
According to RP Data, Adelaide led the way, with values lifting 2.4 per cent, followed by Perth at 1.6 per cent, Sydney at 1.5 per cent , Melbourne at 1.4 per cent and Brisbane at 1.1 per cent. On a quarterly basis, capital city dwelling values recorded a 2.0 per cent capital gain which is the highest quarterly result since the three month period ending May 2010.
All capital cities apart from Hobart and Perth have seen home values rise over the quarter. Perth’s 0.2 per cent per cent fall is a virtually flat result, while Hobart recorded a 1.8 per cent decline in dwelling values.
Mr Morgan said he does not expect a dramatic surge in house price rise but he believes the east coast will enjoy a steady and sustainable recovery.
“I am not saying we are heading back into the boom times that we experienced before the Global Financial Crisis but more and more buyers are coming to the realisation that the worst is over and now is the right time to buy,’’ he said. “If anything, the smart money is already back in the market.”
Mr Morgan’s comments come hot on the heels of the Reserve Bank of Australia’s latest cut to the official cash rate, which is expected to stimulate property buyer sentiment further. The RBA reduced the rate from 3.5 per cent to 3.25 per cent.
“Rate cuts take time to filter through the economy, but our research shows the property market responds quickly,” said LJ Hooker deputy chairman, L. Janusz Hooker. “This rate cut will lead to cheaper loans and add momentum to the housing market in the coming months."
“It could also fuel construction leading to property-related jobs and an uptick in tax revenue for the government.
“In the marketplace we have seen house prices rising on average since the last RBA rate cut in June so vendors have been buoyed heading into spring selling season and will continue to be.”
“Borrowing rates to buy a home were historically low even before this rate cut,” he continued.
“Market rates for three-year fixed-rate mortgages are 113 basis points below the average since 2000. This will encourage more Australians to buy property, whether a primary home or an investment, in the coming year.”