Prior to the Reserve Bank’s surprise decision to cut the official cash rate to 2.25% early in February, speculation was rife as to the likely outcome. Shortly after the announcement, Commonwealth Bank was the first major lender to pass on the cut in full, slashing both its standard variable loan rate as well as the three year fixed rate. Westpac was next to move, announcing it would pass on even more than the official cut with 28 basis points off the standard variable rate. NAB and ANZ were quick to match the CBA, and by the end of the week, a total of 22 lenders had passed on discounts to their customers.
The news is bound to stir up even more buyer activity in an already competitive property market, with the latest statistics showing the total number of properties for sale in Melbourne actually fell in January. While SQM Research reported the number of listings across Australia rose by 1.9% during the month, Melbourne stock levels fell by 0.8% in January and are now 7.5% lower over the year.
Meanwhile, RP Data/CoreLogic have reported Melbourne’s property market has charged into 2015, achieving the nation’s fasted growth rate of any capital city in January with a 2.7% rise in the median price. Analyst Robert Larocca predicts the coming year is likely to produce moderate price growth this year, after experiencing stable growth over the past two years. A separate RP Data report revealed Melbourne is now one of the top spots in the country for making a profit on property – a recent review of sales in the September quarter of 2014 showed 35.7% of all Melbourne sellers sold for at least double their original purchase price.
With several forecasters (including Westpac’s “interest rate whisperer” Bill Evans) predicting a further rate cut in March, the outlook is extremely positive for first quarter property sellers. Homeowners who’ve been considering their options for some time would be well advised to carefully consider the opportunity to go to market under such favourable conditions.