The Reserve Bank of Australia (RBA) has just announced its cash rate decision for the month of May.
In accordance with overwhelming expectation, the central bank has held at the current record low of 0.25%, following the twin 25 basis point reductions executed in March.
The bad news
The decision to hold the rate has been accompanied by a “non-vote of confidence” in the property market, with nearly 60% of analysts indicating now is not a good time to buy, according to a survey conducted by comparison site Finder.
The economists also provided insight into the expected trajectory of home prices over the coming months. Of the capital cities, Hobart is predicted to see the largest average price drop of 10.5% by 2021, followed by Sydney at 10.2%.
Darwin and Melbourne have been forecasted to plummet by 9.5% and 9.2% respectively, with Brisbane, Perth and Adelaide all expected to see drops of around 8%.
The analysts expect Canberra to fare the best, with a dip of just 6.4% projected.
“It’s not just experts, we’ve also seen consumer sentiment about whether it is a ‘good time to buy’ drop from a peak of 60% in July 2019 to just 42% in April,” said Graham Cooke, insights manager at Finder.
“Both househunter and seller demand has weakened in the last month as Australians hunker down to help stop the spread of coronavirus.”
According to Graham, increasing unemployment and ballooning economic uncertainty will contribute to house prices sliding over the rest of the year.
The good news
Where activity is set to continue gaining steam, however, is in refinancing, as highlighted by mortgage aggregator Finsure.
The record low cash rate has been prompting mortgage holders to refinance and take advantage of the best home loan rates on offer in decades.
“We have seen a surge of interest in refinancing in response to COVID-19, with interest rates in the low 2% range on offer,” said Finsure managing director John Kolenda.
While Kolenda was quick to urge brokers to help struggling borrowers access the relief measures put in place by the majority of lenders, he also highlighted the opportunity to assist mortgage holders in a more stable financial position.
“If you have been fortunate to not have been hit hard economically by COVID-19, now is the time to take advantage of record low rates and refinance,” he said.