The Reserve Bank has left interest rates on hold for the month at 2 per cent, but experts say people shouldn’t expect supercharged house price growth if they are cut again this year.
The RBA has only one more opportunity to cut rates before Christmas, and have kept rates steady for five months in a row.
While the ongoing low interest rates have driven exceptional house price growth this year in Melbourne and Sydney, another cut in November is unlikely to have the same impact.
Shane Oliver from AMP Capital Investor said he believed the RBA might cut interest rates again on Melbourne Cup Day as it had done in the past.
“What happened earlier this year when the Reserve made a cut was a boost to both prices and auction clearance rates,” he told The Age.
“I doubt if they cut again it would give a similar boost…homebuyers can’t count on a rate cut generating the same results we’ve seen over the last few years.”
Slowing clearance rate figures and rising stock levels are indicating a softening in the Melbourne and Sydney property markets.
Domain Group’s senior economist Andrew Wilson also spoke to The Age and also doubts a new rate cut in November will have the same strong stimulatory effect on house prices as the RBA’s cuts in February and May this year did.
“Lower rates typically increase demand for housing, but I don’t think it’ll have a significant effect on the number of listings,” he said.
“With the very strong numbers of supply coming through, I’m not sure whether it’ll give the bounce that we had earlier this year to sellers.”
As for the other capital cities, LJ Hooker chief executive Grant Harrod said a rate cut would help to spur prices in Perth, Adelaide and Hobart who, unlike Sydney and Melbourne, haven’t been experiencing the high growth.
“I wouldn’t be suggesting we would see a big impact to the property market but it would be a big vote of confidence,” he said.
“There is enough competitive pressure on banks to pass it on to owner-occupiers but still hold on for investor loans.”
