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Sales agents and property managers alike should take note of the shifts occurring in the market as a result of fiscal and economic policy, as there is a direct link between those factors and the buying power and investment appetite of Australian consumers.
The state of play in August
The central bank today left rates on hold at 1 per cent, after two consecutive drops in the previous months.
As reported by REB, the call from the central rank didn’t come as a surprise to many of Australia’s top economists. In saying that, those economists are expecting two more rate cuts, taking the official cash rate to an all-time low of 0.5 of a percentage point.
What this means for buying activity
The recent cuts from the Reserve Bank prompted a spate of lenders to drop their interest rates on mortgage products, which has, at the very least, lifted confidence in the buying public.
With the next rate cut not anticipated until towards the end of the year, it may be a few months before another flurry of confidence spikes up.
However, there are other market factors which could trigger further easing of borrowing conditions, making credit more accessible to prospective buyers. For example, the banking regulator recently eased its serviceability guidance for lenders, which banks and non-banks alike passed on in their conditions. Most of Australia’s popular and major lenders have acted by loosening their serviceability terms, and there’s more to come.
Slowly, slowly
In CoreLogic’s most recent home values index, Sydney recorded a values spike of 0.2 of a percentage point, after consecutive months of plummeting into the sharpest downturn since the global financial crisis.
Although there are signs of life, CoreLogic’s Tim Lawless cautioned investors against expecting massive capital gains, as were experienced prior to the 2016 downturn.
You can read about CoreLogic’s data in full here.
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