Appetite returns for residential investors

by Phil McCarroll07 Sep 2016
Despite the Reserve Bank of Australia leaving the official cash rate on hold yesterday, resurgent conditions are expected to continue within the Australian property market.

With the cash rate sitting at 1.5%, a range of different buyer types are set to become even more active across the traditionally strong selling season as the impact of August’s rate cut continues to flow through to borrowers.

“The low interest rate environment and the onset of spring seem to have resonated with investors, whose appetites appear to have returned, while new developments in select markets which include first home buyer allocations are performing well,” Leanne Pilkington, managing director of real estate franchise Laing+Simmons, said.

“The past few weekends have seen strong clearance rates achieved in Sydney and despite concerns around the impact of new supply, prices are buoyant and vendors have every reason to be confident,” Pilkington said.

While conditions within the property market were nominated as a reason as to why the RBA may have left the cash rate on hold, Pilkington said the market, particularly in NSW, is a balanced one at present.

“We see the market nicely balanced between buyers and sellers in the current climate and the decision to leave interest rates unchanged supports the status quo leading into the stronger selling months,” she said.

“Some are suggesting we could see a return to strong price growth over the short term however we see any shift being more moderate and sustainable.”

Any RBA concerns about a reacceleration of house price growth may also be kept at bay by moves lenders make independent of the central bank.

“I suspect many banks are considering future repricing opportunities as they face further pressure from funding costs, additional compliance costs and pressures of return on equity for their shareholders,” 1300Homeloan managing director John Kolenda said.
 

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