The Reserve Bank’s decision to leave the official cash rate at the historic low of 1.5% was no surprise, with almost no expectation there will be any change for the rest of the year at least. 87% of experts surveyed by Finder.com.au do predict the next move will be upwards however, with the majority expecting up to three rate hikes over the next two years.
Attempts by the regulator to cool the property market via tightening on lending restrictions do not appear to be having much of an effect on Melbourne property buyers, according to the latest report on house prices by researcher CoreLogic. For the first time, Melbourne prices have grown more than Sydney’s on an annualised basis, with the former growing by 15.9% compared to 12.4%. The result comes off the back of the July results, which showed Melbourne prices increasing by 3.1% as compared to a 1.4% growth in Sydney and a 0.7% fall in Brisbane.
Meanwhile, Domain reported Melbourne auction clearance rates ranged between 72% to 77% over the month, higher than the 69.5% recorded in June. Interestingly, the number of Melbourne properties for sale fell by 7.4% from June and were an incredible 20.5% lower than July last year, according to SQM Research.
In the face of the price rises in Australia’s two key property markets, negative gearing has again become a key focal point for political parties, with Labor officially stating affordability will be its main platform at the next election. The Herald Sun suggested cuts to property tax concessions are certain regardless of who ends up in power, with Labor proposing gearing only be allowed on new properties, the Greens effectively wanting to abolish it on all properties (albeit with phasing and limited grandfathering) and the Liberal party already about to enact cuts to depreciation and travel allowances.
With limited properties available for sale resulting in strong competition between buyers, the opportunity exists for savvy vendors to take advantage of the current imbalance between supply and demand. With a flood of new stock expected in the traditionally busy spring market, timing will be crucial for a good result.