Ray White Chairman Brian White.
The Reserve Bank’s second cut to the national cash rate in as many months was met with a mostly positive response from the housing sector, with industry bodies speaking in support of the decision.
In a statement, RBA Governor Philip Lowe said the reduction of the cash rate to 1 per cent would assist with “faster progress in reducing unemployment and achieve more assured progress towards the inflation target”.
RBA rate cut – What they said
The two interest rate cuts in consecutive months would see this proportion decrease to 28.6 per cent, the lowest since 2003 and comes at a most opportune time for first home buyers.” – REIA President Adrian Kelly.
“Perhaps it’ll now be perceived that there’s more risk in not acting in today’s market than there is of not taking advantage and getting into or upgrading in the property sphere.” – Ray White Chairman Brian White.
“The overriding issue is the lending market is still very challenging.” – Finsure managing director John Kolenda.
Real Estate Institute of Australia President Adrian Kelly described the cut as a “major boost” to housing affordability.
“REIA’s Housing Affordability Report for the March quarter 2019 showed that the proportion of income required to meet loan repayments decreased to 30.3 per cent over the quarter, a decrease of 0.9 percentage points and a decrease of 1.0 percentage points over the past year,” he said.
“The two interest rate cuts in consecutive months would see this proportion decrease to 28.6 per cent, the lowest since 2003 and comes at a most opportune time for first home buyers.
REIA President Adrian Kelly. Source: REIA
Mr Kelly said unlike the last series of cuts in 2015 and 2016 which stimulated the housing market through increased investor activity, this cut will stabilise the market.
“It is first home buyers that that will benefit most with the number of first home buyers decreasing nationally to 8,010 in April with the average for the first four months of 2019 being 8,319, down by 1,100 per month compared to the last four months of 2018.”
Ray White Chairman Brian White also welcomed the move, believing buyers will enter the market with more confidence “knowing key downside risks have been mitigated.”
“We had nearly 50,000 people attend our auctions in June alone, and we’re also now starting to see early signs of more listing activity,” he said.
“Perhaps it’ll now be perceived that there’s more risk in not acting in today’s market than there is of not taking advantage and getting into or upgrading in the property sphere.”
Finsure Managing Director John Kolenda. Source: Finsure
Tough Lending Regime Negates Lower Rates
A challenging lending market is overriding the ability of many consumers to benefit from the lowest official interest rates in Australia’s history, says leading mortgage aggregator Finsure Group.
Finsure Managing Director John Kolenda said the likelihood of even lower interest rates is not helping consumers seeking finance.
“The overriding issue is the lending market is still very challenging,” he said.
“There are a number of issues making it hard for consumers and housing finance is high on the list.
“The latest housing finance figures for April 2019, released by the Australian Bureau of Statistics, showed the value of housing finance commitments was 19 per cent below what it was 12 months previously.”
Article Source: The Real Estate Conversation.