The broadly expected Reserve Bank’s (RBA) decision to leave the official cash rate on hold at 2.5% represents 14 months of stable rates. In the lead up to the decision, the possibility for the introduction of tighter lending policies was a far more hotly debated topic, with most experts predicting that interest rates are unlikely to begin rising until at least early 2015.
Regardless, the RBA’s Quarterly Financial Stability Review released in mid-September warned that the central bank will need to take measures to control the housing market. Citing price growth of 16.2% in Sydney and 11.7% in Melbourne over the past 12 months, the RBA has termed Australia’s housing and mortgage markets as “unbalanced”, flagging the likelihood of new macro-prudential measures to limit high-risk lending by the end of the year. The announcement sparked the usual round of property bubble reports, along with alarming predictions for future price corrections. But the latest property price data has since revealed that property price growth has already levelled out in Melbourne, despite ongoing strong buyer demand.
RP Data’s monthly index showed that after recording 0.8% growth in August and an “extraordinary” quarterly growth of 6.4% across winter, Melbourne prices fell by 0.8% in September. The fall was amid a high average of 77% clearance at auction through the month, bringing the annual growth in Melbourne prices to a moderate 8.1%. Meanwhile, SQM Research has reported an abnormal fall in the number of properties up for sale in September, with Melbourne recording a 3% decline from August to September. Demand continues to outstrip supply in many areas, leading to shorter days on market and accounting for high auction clearance rates. Despite the strong demand, buyers continue to be somewhat cautious due to some uncertainty over the country’s economic future. While good opportunities exist for sellers in an environment of limited supply, formulating realistic price expectations is the key to achieving a healthy outcome.
Leasing out a property is a decision influenced by a mix of financial, lifestyle and long-term planning considerations. For many property owners, it’s not just about owning real estate, but about how best to leverage it to meet their personal and financial goals. One of the strongest motivators is financial … Read more
Article Source : Nerida Conisbee – Chief Economist Trying to predict how many homes will sell in any given year is far more complicated than predicting prices. While price growth is often assumed to be the main driver of transactions, the relationship between the two is surprisingly weak. There are … Read more