As widely predicted, the Reserve Bank cut interest rates to a historic low of 1.25% last week. Following close to three years at the then-record low of 1.5% (the previous change was a 25 basis point cut in August 2016), the impact of this reduction in the cash rate – combined with the Coalition’s election victory and proposed removal of the APRA buffer – is driving renewed confidence in our property market.
Across the Greg Hocking network, we’re seeing positive signs on both the buyer and seller sides. More people are attending open inspections, and we’re fielding the highest volume of appraisal requests that we’ve had in 2019. Our observations are backed by data released by Domain, which reports an 11% uptick in the number of people attending open inspections since the election, and a 10% jump in appraisals.
There were only a small number of properties auctioned this weekend due to the Queen’s Birthday public holiday, however, the clearance rate has been above 60% for the past few weekends after dipping below that mark for much of the year. And while Melbourne dwelling values were down 0.3% in May, this is the smallest decline since March 2018.
All up, there’s a sense that market sentiment has changed, and people are behaving as though the downturn may be close to an end. The reality is a lot of people – both buyers and sellers – have been sitting on their hands for quite a long time and are motivated to move now that things are looking more promising.
Across our network, we’re listing properties that vendors have been on the fence about selling for months as the market changes have them feeling more confident about achieving a strong result. Stock levels are still low compared with previous years, and savvy vendors realise that if buyers come back to the market in a big way, competition for quality properties will be strong. (It’s worth bearing in mind that it usually takes around four to six weeks for most vendors to get organised between the decision to list and their property going on the market, so there is a definite opportunity for early movers to take advantage as buyers return to the market).
On the buyer side, we’re seeing renewed interest and activity across the board. Investors, who had more or less put a hold on purchase plans until the election outcome was known, are certainly back in full force, sensing that the bottom of the market is likely upon us, if not already in the past. First home buyers are also feeling optimistic that lower interest rates and property values may allow them to finally get a foot onto the property ladder.
Investors and FHBs aside, buyers generally are feeling more buoyant than they have in months. Even those who are not actively looking are telling us they plan to circle back to their lender or mortgage broker over the next few months to see how much they’ll be able to borrow if the APRA buffer is abolished. Applications for pre-approvals and new loans have surged – Commonwealth Bank recently recorded its largest increase in home loan applications in more than six months.
Whether you’re looking to buy, sell, or just test the waters, it’s a sensible time to review the market and look at your options. Speak with your local Greg Hocking office about what’s happening in your area and consider getting an appraisal if you’re considering selling or leveraging the equity in your existing property to invest.