Interest rates dropped 2 months in a row, what does this mean?
Posted Wednesday 24th July
In June 2019 the Reserve Bank cut the official cash rate for the second month in a row to an all-time low of 1 per cent. There is no doubt this will have a positive impact on the dwindling property market, but experts say the incline won’t be as rapid as in the past.
Data suggests that in 2008 and 2011 rate cuts led to a swift restoration of the property market and the same data also highlights that both Melbourne and Sydney are still down a fair way from their peak, Sydney down by 14.9% and Melbourne down by 11%. Whilst some experts believe that the market may climb back a little slower this time than last time, it’s clear that they believe we’ve experienced the bottom and the only way is up. What did the wealthy people of Wall Street do in the height of the Global Financial Crisis? They bought stocks.
At a local level, we’re feeling much the same. Without doubt, the property market took a downturn in mid-2018 but recent results suggest that we’ve felt the worst of it and the market is starting to bounce back. Even though the uprise won’t be as expeditious as in the past, it will certainly have a positive impact on the housing market.
As a result of the cuts we can expect to see:
- More affordable housing
- Loans much easier to obtain
- More people able to get into the property market
- Investors coming back into the property market
- More people leasing out properties
In June Clark NextRE already saw a turn in the market, with more first home buyers and investors coming back in the market and an increase in vacant land enquiry. Buyers are getting back into the swing of things, it’s good to see some positivity in the air, there is no doubt the market is picking up again so for the buyers sitting on the edge now is a great time to get in before property prices rise again.
“From an investors point of view, I think this is the perfect time to jump back in… property prices haven’t yet caught up with the change in interest rates so they should get in and buy now before the prices pick up again”
– Anthony Rabl (Clark NextRE Sales Agent)
There has been a lot of negative press about the property market from mainstream media, we’ve found in recent months when doing appraisals that for the first time in our memory, vendors are lowballing the price of their homes. Yes, the property market has been down but as a result of these record-breaking 1 per cent interest rates, property prices will rise. It’s exciting to see property prices rise again and property owners start to recognise the true worth of their asset. As a bid to help people find the worth of their property, we offered a $2000 local shopping spree to anyone that gets an appraisal done in the month of July.
All in all the record low-interest rates are great for real estate, it really is a borrowers market at the moment, so we urge buyers to make the most of the low-interest rates and market delay and buy before property prices rise again. After the year we have had it’s great to see things picking up again and we are excited to see what’s ahead.