The December Reserve Bank (RBA) decision to leave the cash rate on hold at the historic low of 1.5% had been universally predicted by the experts, although there’s a widening gap in the expectations going forward.
The most recent finder.com survey of 35 leading economists and commentators revealed 26% are now predicting a rate rise in 2017, with some tipping it could happen as early as March next year. But regardless of official movements, 86% said out-of-cycle increases are likely to continue into 2017 with the US almost certain to raise their cash rate this month.
The comments have come on the back of increases in both variable and fixed interest rates by the major lenders by up to 65 basis points. The banks say they’re raising rates to counter the increased cost of international funding costs caused by the “Trump effect”, as they bring in tougher lending standards and close loopholes.
Interestingly, the latest CoreLogic Hedonic Home Value Index showed Melbourne house prices fell in November by 1.3%, while apartment prices were said to have fallen 3.2%. Regardless, year-on-year, Melbourne prices are up by 11.3%.
Of course, December brings the usual round of property predictions for 2017, which continue to vary widely. Amid the usual bubble reports, SQM Research has predicted up to 17% growth in Melbourne prices, if rates are cut further. Even with a rate rise, Christopher predicts growth of up to 13%. The Sydney Morning Herald reported residential property is likely to stay at the top of the property cycle for another year, according to the Australian Property Institute’s Property Directions Survey.
The signs for summer are certainly positive, with Domain saying the Melbourne auction market “roared” into December with a clearance rate of 79.9%, its highest for two months. Despite SQM Research reporting Melbourne listings rose over November by 3%, limited stock continued to drive heavy competition, with fewer than 1200 properties up for sale compared to the 1447 on offer during the same weekend last year.
With just a short time until the extended holiday break, conditions heading into a new year are as difficult to predict as ever. For those property owners considering a 2017 sale, getting organised now for an early launch may well prove to be a good decision.