The Reserve Bank’s (RBA) decision this week to leave the official cash rate on hold at the historic low of 1.5% had been unanimously predicted, however there’s now a growing number of experts who say any reprieve is only temporary.
Former RBA board member John Edwards attracted significant publicity last month with his claim that consumers could be facing up to eight interest rate hikes over the coming two years. The most recent Finder.com.au survey of 34 experts and economists showed 88% of those asked also believe the next movement will be upwards, however time frames vary with only three respondents predicting there will be two or more rises in 2018.
Meanwhile, despite the doomsayers predicting a crash, the latest house price index from researcher CoreLogic shows Melbourne prices rose by another 2.7% in June, reversing a small dip in May. Quarterly and annual growth in Melbourne at 1.5% and 13.7% respectively are both now at the highest level of any capital city.
CoreLogic are predicting a slowdown this year, based on the lending restrictions for property investors that have been implemented by regulatory body APRA and an increase in the number of developer properties coming to market. Treasurer Scott Morrison told the Australian newspaper that shift means owner occupiers have a greater chance of getting into the market, with the changes also resulting in falls for these customers in rates on home loans.
Interestingly, SQM Research reported the number of properties for sale in Melbourne rose sharply over June, although listings year-on-year are still significantly lower, down 12.7%. The ongoing shortage of stock resulted in strong auction clearance rates above 70% throughout the month, a great result particularly given the traditionally quiet winter period.
While the predictions continue to range from boom to gloom going forward, the current state of the market offers ample opportunity for both buyers and sellers in what is fast approaching a more normal set of market conditions.