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This spring market is shaping up to be busier than usual for real estate agents as demands ramp up in a seller’s market.
Following the third Reserve Bank of Australia rate cut earlier this month to 3.60 per cent, down from a peak of 4.35 per cent in January, the property market has built on the momentum to continue its steady recovery.
REA Group senior economist, Anne Flaherty, said the latest cut will give buyers more borrowing power and more confidence to enter the market.
She said that previous rate cuts have historically increased buyers’ confidence and readiness to purchase a property.
However, as demand will heighten, Flaherty said property prices will likely grow further in response.
“This was seen in 2020 when the slashing of the cash rate to just 0.1 per cent triggered one of the fastest episodes of property price growth seen in Australia’s history,” Flaherty said.
In July, the PropTrack Home Price Index showed that property prices rose by 0.3 per cent nationwide, recording a new record high at $827,000.
Since the beginning of the year, national home prices have increased by 4.9 per cent, with regional areas leading the growth.
“With interest rates now lower, and the possibility of a further cut before the end of the year, the question is how quickly the change will filter through to the market.”
Additionally, Flaherty said the spring market will also support the development of new projects, as confidence in the construction sector rises.
She said that lower interest rates ease developers’ financing burdens across project phases and boost pre-sales activity, which is often critical for securing funding.
“When buyers are more confident and able to borrow more, they’re more likely to commit to off-the-plan purchases.”
Flaherty said that with spring approaching, falling interest rates, stronger household finances and renewed confidence have been aligning to drive an upswing in housing market activity.
“Prospective home owners could see higher levels of competition when looking to buy, with vendors enjoying robust selling conditions,” she concluded.
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