LAST week, the Reserve Bank of Australia cut the official cash rate to an historic low of 1.5 per cent.
The outlook in the market was positive after the last rate reduction in May; however the Federal Election put a damper on buyer and seller activity in some areas.
We asked members of the industry what they expected following the latest rate cut.
Director, Acton Dalkeith and Cottesloe
We are seeing a trend of buyers moving from rental accommodation into purchasing their own property.
This is particularly evident in the sub $1.2 million price point.
As interest rates have dropped, family homes in this price point have become very affordable and these properties are selling very quickly. As banks pass on the latest round of cuts, we expect this trend to continue, with many buyers now reporting having missed out on properties.
Director, Bexleys Real Estate
I do not believe the rate cut, which has not been fully passed on to the consumer by the major banks, will have any effect on property buyers’ sentiment. I consider job security and the general economy is weighing more on many buyers’ minds.
In the suburbs we work in, including Wembley, Churchlands, West Leederville and surrounding areas, demand continues to be strong for quality housing and this type of buyer will take the latest interest rate cut as a bonus not a “trigger.”
It is hard to measure whether the last rate cut had any effect on the market due to the Federal Election, which contained some possible negative policies regarding property ownership and investment.
However, our office has seen more buyers at home opens and more buyer enquiries since the Federal Election, which is promising.
Peter De Chiera
Director, Stocker Preston
The latest cut should have a further positive effect on the real estate market, making the purchase of real estate more affordable.
The last cut certainly had a positive effect on the market with increased buyer enquiries and sales, particularly at the lower end of the market.
Hopefully this latest cut will flow through to properties over $1 million.
The previous rate cut definitely stirred some interest in the market and from what we saw, people had become bored with the extended Federal Election campaign and decided to get on with their lives. We expect that the most recent cut will continue to drive renewed interest in the Perth apartment market.
Rental yields are still very good at around 4.5 per cent per annum and with borrowing rates for investors available at around 4.5 per cent, people can buy an investment property with little or no ongoing monthly outlay.
Although rental vacancy rates have increased over the past two years, we have now had two consecutive record months for leasing so I think you will see the vacancy rate coming down very soon. n