Real estate agents say the RBA interest rate cut will kick-start more buyers trying to get hold of property in an already low-supplied market.
Property listings for this year are significantly down and demand for the limited dwellings on offer is sure to increase.
Real estate agent Andrew Hayne from Marshall White deals with premium properties in Melbourne and told The Australian Financial Review that low interest rates were stimulating buyers to buy homes before they sold their own home.
“Because of low interest rates, they’re prepared to take a bit of a punt on selling their own, post-purchase, and that will mean more buying if rates are lower and the cost of borrowing is lower and will they risk even less,” he said.
“It’ll deprive the market of stock because people will hold of selling until they’ve bought. That’s the catch.”
Despite an increase in demand, prices gains are expected to stay relatively subdued amid tighter lending restrictions.
Managing director at SQM, Louis Christopher, said the amount of extra demand will depend on how much the banks pass on the rate cut, and none have announced they will pass it on in full thus far.
“Thirteen basis points won’t do much, but if 25 basis points are fully passed on it would accelerate the market in Melbourne and Sydney and then APRA would have to step in,” he told The Australian Financial Review.
In Melbourne, Hocking Stuart’s Scott McElroy said the interest rate cut would probably reduce dwelling stock levels up for sale in the lower end of the market.
“It’s going to keep property as a great place for people to park their money,” he told The Australian Financial Review.
“When interest rates are so low, there’s no incentive to sell. Rental returns are keeping pace.”