The Reserve Bank of Australia’s decision to hold interest rates at the historic low of 0.75% last week might have first homebuyers wondering what this means for them. Similarly, homeowners looking to sell might be wondering the same.
So, what does the 0.75% cash rate mean for the housing market?
Of Australia’s eight capital cities, Perth has seen the greatest improvement in housing affordability over the last year.
While the major banks have only passed on about half of the RBA’s recent cut, mortgage interest rates have never been more attractive to people looking to buy into the market. The Real Estate Institute of Australia has stated that the latest inflation stats are good news for homebuyers.
Looking at Australia as a whole, October showed the sharpest monthly rise in house prices (1.2%) since May 2015, continuing a four-month trend of rising property values. CoreLogic’s predictions that the national housing market officially troughed in June seem increasingly accurate and as a result, consumer confidence is increasing.
While Perth is at the tail end of this housing price increase (along with Darwin), the national figures indicate that right now is the ideal time to buy into Perth’s real estate market, before the housing prices start to follow the trends of Australia’s other major cities.
CoreLogic Head of Research Tim Lawless stated that, because the national index is still significantly lower than the October 2017 peak, buyers still have some time to take advantage of improved housing affordability before values start to sky-rocket again.
This could be particularly true for Perth homebuyers.
Mr Lawless attributed Australia’s current housing market rebound to the following factors:
– low mortgage rates
– greater affordability
– loosening in credit rules
– improved housing sentiment
As buyers gain confidence in the market and take advantage of the low interest rates and housing prices, activity begins to increase and the ball begins to roll.
In a nutshell: Buy in before property prices and interest rates start to rise, and ride the wave to the top!
As for homeowners, Perth is currently experiencing a surplus of owners biding their time to sell.
While homebuyers are likely eager to get into a new place in time to enjoy the summer, homeowners looking to sell are fast approaching the perfect conditions for selling their properties over the peak of the summer season.
Auction clearance rates are sitting comfortably in the high 70s nationwide, indicating that buyer activity is on the rise. Despite the fact that Perth’s house prices aren’t experiencing the recovery of other markets just yet (particularly Melbourne and Sydney), the rate of decline has slowed significantly.
As things start to swing, Perth homeowners keen to sell might find that this summer is the optimal time to prepare their property for the market, as the warm weather brings out all the homebuyers that are enthusiastic about the current interest rates.
In a nutshell: Prepare your property for the market now, so that it’s ready to sell when prices start to swing over summer!
After all, what goes down must come up…