RBA interest rate cuts on the Australian Real estate Market

Real estate market

The RBA has made a move to cut the cash rate down to a record low that will hopefully save property owners around $700 a year in their repayments but it will not reignite with a price boom, so the housing experts have claimed about property valuation.
the Governor Philip Lowe made an announcement in the RB board meeting on Tuesday that the rates will see a cut by 25 basis points to an unprecedented 1.25 per cent. It is the first time the RBA has changed the cash rate since 2016. The bank is saying it was a necessary move to support the employment growth and to bring in inflation to its target level.

The average home loan for Australia is sitting around the $384,700 the cut if it is passed on by the banks will lead to savings of $700 per year which is nearly $21,000 over the loan period.

The borrowers who are paying loans of $1 million are going to save around $1800 a year with those who have loans sitting at $750,000 would be saving around $1400.

The savings need to be a call for actions for the potential buyers who have been sitting back on the fence not yet wanting to get into the market. Previous cuts have helped the property booms in Victoria and NSW the Corelogic who is head of the research states that housing market conditions are very soft yet for the prices to begin to rise and the frantic pace like they did the previous time there was a cut made.

The average buyer will save around $700 on their loan a year but this merely depends on whether the banks are happy to pass on the cut. Global trade tensions in the economy are uncertain and seem to be a weak point still when it comes to the demand for housing due to the restrictive lending practices that come from the banks. It would be definitely keeping a lid on any of the potential price surges. The lower rates are not looking like it will be as effective at kick-starting the housing market as what we have seen in the past before. Consider prices have been falling across Melbourne, Sydney and other regional areas the main impact of the rate cut is definitely a boost within the buyer’s confidence.

Real estate market

Combining that with moves from the financial regulators to loosen the grip on credit would help stop the falling prices but not yet send the demand through the roof. The move should be seen as supporting an earlier trough in housing values.

LJ Hooker head researcher Mathew Tiller said that a rate cut would most likely encourage disenchanted home seekers who are wanting to reconsider having another crack a property purchasing for better property management.
A similar trend has occurred after the recent federal election when it has become clear that negative gearing tax benefits won’t be taken away, a labour party proposal. The last few weeks have brought in more buyers re-engaging and more attending to open homes.

Despite the higher levels of interest, we are seeing from buyers the number of properties that are coming on the market for sale still has not risen to meet the demand. The RBA decision is good or owners who are wanting to sell in the second part of the year in 2019. These rates are also ideal in order to maintain the economy at equilibrium and avoid extreme inflation pressures to hit the Australian market. These fluctuations are soon forecasted to be stabilised with the right precautionary measures taken by the Australian Government.

 

 

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