The Reserve Bank’s (RBA) early September decision to leave the official cash rate on hold at the historic low of 1.5% was almost unanimously expected. The future, however, is less certain – a Finder.com.au survey of experts just prior to the announcement saw one third predicting a further cut before the end of the year, while 40% expect a cut in the first half of 2017.
With variable loans now available from many lenders at rates of under 4%, buyer activity remains incredibly strong, with a shortage in supply creating even more competition for the available properties. The latest SQM Research report shows that while listings for September were consistent year-on-year, the number of properties for sale fell by 3.3% from the previous month. The shortage is driving high auction clearance rates, with CoreLogic reporting a sale rate so far this year of 72.9%.
Amidst the buoyancy, the usual round of gloomy predictions made their way into the media last month, with Australia’s richest man and property developer Harry Triguboff calling for urgent action in the face of what he described as real risk to the apartment market. Triguboff said a “very significant” number of Chinese off-the-plan buyers were failing to settle after Australian banks withdrew funding for overseas investors. Shortly after, a sensational report from a US defence think-tank warned Australia is “six weeks away from a housing market collapse”.
But NAB chief economist Alan Oster labelled the report “garbage” in a Nine News interview, while CoreLogic head of research Cameron Kusher said the chances of the report’s predictions coming true were less than 1%.
Interestingly, the latest Corelogic report has shown Melbourne property price growth is now outpacing the rest of the nation, with values spiking by 5% over the past quarter and 2.3% in September alone. Annualised growth is now at 9%, with prices having grown by 41.3% since the current growth cycle began in June 2012.
The market is currently suffering an unusual dynamic – property owners who would otherwise be sellers are instead holding their properties, either paralysed by the fear that there’ll be nothing to re-buy or waiting for further anticipated price gains. This tendency is artificially constricting supply even further, putting greater pressure on prices. With conditions perhaps better right now than they’ve ever been for sellers, we would encourage those property owners who may be holding back to explore the opportunity to take advantage of the current environment.