The Reserve Bank’s (RBA) decision to leave the official cash rate on hold once again at 2.5% was widely expected, with July 2013 the last time rates changed. While the majority of economists are now predicting rates will begin rising in mid-2015, futures markets are pricing in a 40% chance of a further rate cut.
The stability is good news for the property market, which continues to experience price growth, albeit at a slower pace than earlier in the year. The latest RP Data report showed Melbourne lead the other capital cities over October, with median price growth of 1.9%. Year-on-year, Melbourne has now recorded a healthy 8.9% price growth. Analyst Cameron Kusher said he believes there’ll be continuing moderation in the pace of growth, with only a rise in interest rates or controls on bank lending likely to trigger any real slowdown.
Meanwhile, SQM Research reported the number of properties for sale rose sharply in October, partially due to there being five Saturdays during the month. Nationally, there were 7.7% more properties for sale last month than in September, but the increase in Melbourne listings was comparatively modest at just 2.6%. Melbourne’s property market was put to the ultimate test during the last weekend of October when a record 1700 properties were up for auction on the same day. But Wakelin’s Advisory Service Richard Wakelin said the impressive 72% clearance rate achieved was higher than the low 60’s he’d expected, begging the question of whether recent market pressure may continue into 2015.
With only a handful of weeks until the property market effectively closes for the extended break over late December to mid-January, both buyers and sellers are highly motivated to finalise a transaction prior to Christmas. With realistic expectations on price, sellers are achieving good outcomes, particularly via the auction method.