Falling Interest Rates Take the Pressure Off
We’re happy to note that the Reserve Bank of Australia has slashed interest rates yet again – this time by 1%.
On Monday 2nd December, 2008, The Reserve Bank cut one percentage point from its key cash rate to 4.25% in its latest bid to avert a recession. The move brought the cuts since September to three full percentage points, as the RBA changed tack.
According to an article on the Sydney Morning Herald, investors are “pricing in a further cut of about 75 basis points when the RBA’s board next meets in February, according to Credit Suisse figures”.
This is very good news for existing homeowners who may have been struggling to make repayments. It means we are less likely to see a wave of foreclosures across the markets, such as has been happening in the United States. I think people who own properties in capital cities are a lot safer than people who own expensive real estate in regional towns and areas which could end up being hit badly if the mining sector slows down due to an across the board fall in commodity prices.
What we are observing here in Queensland is that there is a good level of buying interest for properties under $450,000, and especially those under $350,000. But buyers are still a bit “spooked” and while interest is picking up, people don’t yet feel a strong urgency to buy “before the prices rise”. As rents have continued to rise while the cost of home ownership has come down significantly, we can expect that the levels of investor interest will start to pick up. Within a few months I expect that investors will be actively scanning the market for good buying opportunities and taking them.
If you are looking to upgrade or downgrade its a good time to act, because as long as you are buying and selling in the same market, it should make little difference WHEN you do it.
No one can say for sure which direction property prices will go in the next year. But if you are an investor, think about avoiding regions which depend on just 1 or 2 industries. If those industries go down, property will be hard to sell for a good price around them. I would say, all other things being equal, you are better off buying in Brisbane than any other place in the current economic climate.
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- Lending Defies Rise in Interest Rates Lending to home buyers to build or purchase new dwellings...
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