The current downturn in the housing market looks set to reverse its course, with potential cuts in interest rates and the loosening of mortgage rules expected to encourage buyer inquiries.
While industry experts acknowledge that boom times are still some ways off, signs show that a bottom-out for the sector is looming.
Economists, including those at AMP and Citibank, now forecast the decline in home prices to not be as steep as previously predicted, according to a report by Reuters. In fact, many property and mortgage brokers have seen a notable increase in customer inquiries, including from those looking to score a home for investment.
“The sun is shining all over again now,” Tony Bice, a mortgage broker at Sydney-based Finance Made Easy, told Reuters.
Bice said that the improvement in sentiment could be credited to the re-election of the Coalition Government and the anticipated rate slashes within the next month.
The Australian Prudential Regulation Authority’s (APRA) plan to ease stress tests on mortgages was the “most interesting” policy change, according to Bice. Analysts, meanwhile, predicted that the initiative would boost the borrowing capacity of consumers.
“My inquiries since the last week has risen dramatically. I have written 11 loans in the last four days. In the past, you’d be lucky to write 11 loans in two weeks.” Bice told Reuters. “A lot of my clients are holding off until June to see what the Reserve Bank does. If they drop the cash rate, I expect banks to follow suit. That will finally revive the market.”
Last week, Reserve Bank of Australia Governor Philip Lowe dropped the strongest hint yet that the central bank will soon cut rates. Consequently, most economists are now predicting a decrease in the cash rate to 1.25% from a record low of 1.5%.