Yesterday’s decision by the Reserve Bank to leave the official cash interest rate on hold at 2%
could signal a new phase for many Australian property markets.
The decision, which means the cash rate has remained unchanged since a 0.25% reduction in May, has resulted in a number of real estate commentators suggesting markets are now turning in favour of buyers.
Real Estate Institute of New South Wales president Malcolm Gunning believes first home buyers are set to take pole position in NSW
“It is now a buyer’s market. After a period of solid growth as a result of record low interest rates the tide has now turned in favour of those seeking to purchase property to live in,” Gunning said.
“The limitations placed on investors are now filtering thorough the marketplace. Reduced competition from investors mean first homebuyers and those seeking to upsize or downsize now have the upper hand,” he said.
Gunning’s prediction is backed up by AMP Capital Investors’ chief economist Shane Oliver, who said even if there is another rate cut this year, capital price growth is unlikely to accelerate.
“What happened earlier this year when the Reserve made a cut was a boost to both prices and auction clearance rates,” Dr Oliver told Fairfax media outlets
“I doubt if they cut again it would give a similar boost … homebuyers can’t count on a rate cut generating the same results we’ve seen over last few years,” Dr Oliver said.
Domain Group senior economist Dr Andrew Wilson, who has previously said the tide is turning to favour buyers
, also told Fairfax he can’t see a future rate cut providing a price boost as a flow of housing is set to hit the market.
“With very strong numbers of supply coming through, I’m not sure whether it’ll give the bounce that we had earlier this year to sellers,” Dr Wilson said.
Dr Wilson and Dr Oliver have both previously predicted the RBA to cut rates at the November meeting
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