Home buyers and investors alike could snag themselves a bargain this spring, with early forecasts flagging suppressed property prices and lower mortgage rates over coming months.
For the third consecutive month, the Reserve Bank of Australia’s (RBA’s) Board decided to leave the official cash rate unchanged at 3.50% at its September meeting.
Reserve Bank Governor Glenn Stevens said the RBA will continue to take a sit and wait approach as the effects of rate cuts made earlier in the year trickle down through the national economy.
“As a result of the sequence of earlier decisions, interest rates for borrowers are a little below their medium-term averages,” Mr Stevens said. “The impact of those changes is still working its way through the economy, but dwelling prices have firmed a little and business credit has picked up this year.
“With inflation expected to be consistent with the (RBA’s) target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance on monetary policy remained appropriate.”
But while the Bank seems comfortable with keeping rates on hold for the foreseeable future, not everyone is convinced.
ANZ’s head of economics and property research, Ivan Colhoun, believes growing pressures in the Australian job market and weak commodity prices could force the RBA to lower the official cash rate sooner than expected.
“Slower than desirable employment growth and a continuing upward drift in the unemployment rate will allow modest further monetary policy accommodation,” Mr Colhoun said.
“Weaker commodity prices in conjunction with a still high Australian dollar – if persistent – and the trend in deferrals of a number of resource projects reinforce this expectation.”
His comments follow a recent ANZ Job Advertisement Series which found the number of job advertisements on the internet and in newspapers fell by 2.3% in August after falling 0.8% in July.
While this is sobering news for some, many would-be home buyers and existing home owners could enjoy discounted mortgage rates as a result of any future rate cuts.
But if lower mortgage rates aren’t enough to entice you into the market, new research from RP Data has found national property price growth has come to a halt.
After recovering by 1% in June and by 0.6% in July following the RBA’s back-to-back rate cuts, dwelling values across Australia’s combined capital cities remained unchanged in August.
If you would like to discuss the opportunities that might be available to you this spring, please give us a call today.
