Lenders could soon cut rates for borrowers in an attempt to stimulate the market which has flattened as we enter the new year.
In Melbourne, sale volumes were down and the auction clearance rate dropped to 54 per cent on the weekend but David Wood from Hocking Stuart in Melbourne told Australian Financial Review that he expects sale volumes to remain strong this year.
This is despite the increasing likelihood that official interest rates will go up rather than down next time they move, an inner-city apartment oversupply and affordability issues.
In response to the softening property markets in Melbourne and Sydney, lenders are offering cuts of around 200 basis points to entice new borrowers and are also encouraging existing borrowers to switch from other lenders.
The rate cuts won’t affect ongoing regulatory crackdowns for marginal borrowers that continue to take some of the heat from the property market.
Melbourne’s outer suburbs, where affordability is the key, have been tipped to remain a strong performer after finishing last year strongly.
CoreLogic’s Victorian state director Geoff White told News.com the affordability of some of our outer suburbs such as Sunbury, Pakenham, Glen Huntly, Mernda, Craigieburn and Werribee means they could perform well over the coming months.
“Those areas that have been at, or below, the Melbourne median house price have continued to perform well in the last quarter and are likely to perform well into the first quarter of 2018 when auctions start to crank back up again,” he said.
“There’s definitely been an increase in the number of first-home buyers, and perhaps a bit of a fall-off in the investor market, and first-home buyers are predominantly driven by the values of properties, affordability; that’s why these areas will continue to prosper and do well.”
Mr White said he expects listings to start picking up again after the Australia Day weekend.