The stage is set for a recovery in the Australia's housing market fuelled by extremely tight rental market and chronic undersupply according to an economist.
Savanth Sebastian, economist with CommSec said any downward pressure on interest rates is likely to a surge in people looking to buy their first home. "The calls for rate cuts as early as September are being voiced, and potential investors and homebuyers would not want to be caught napping," he said.
"In recent times a perfect storm of factors has ensured that the housing sector remains the least favoured asset class despite the high rental yields on offer. The home loan market has experienced its weakest start to a year in 19 years. The rate hikes have clearly done their part in spooking potential home buyers and investors from signing on the dotted line. Clearly rate hikes, rising living costs and high oil price have all adding to the stress on the household budget. The Reserve Bank has put rate cuts on the agenda - a far cry from the possibility of further rate hikes that homebuyers were faced with a couple of months ago."
This optimistic outlook comes despite the housing finance data showing the number of total housing finance commitments falling by 24.8% over the past year - the biggest fall in 13 years.
"If Australia's population wasn't rising sharply, the fall in home lending would point to lower home prices. But the rental market remains extremely tight, with rental yields expected to jump a further 10% over the coming year," said Sebastian.
With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now
Top Suburbs :
st kilda west
Get help financing your investment
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local expert Aussie Mortgage Broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus, our mortgage broking service is at no cost to you.
We value your privacy and treat all your information seriously - you can check out