June was the first time we’ve seen back-to-back rate cuts since 2012.
The Liberal Party won the election
As we wrote about recently, should Labor have won the 2019 election, it would have had a major impact on the property investment market.
However, with Scott Morrison retaining his title as Prime Minister, he has overseen a 'if it ain't broke, don't fix it' policy, which is good news for the Australian property market. In addition, he’s mooted helping first home buyers by allowing deposits as low as 5%. While this potential move hasn’t been universally welcomed, it has improved confidence levels.
Interest rates have been reduced
The official interest rate was reduced by the Reserve Bank again last month, the first time we've seen back-to-back cuts since 2012. This should help halt the decline in house prices while also making mortgages more appealing.
Previous rate cuts have led to strong recoveries for the Australian property market, and most analysts are predicting the same to happen now.
ARPA may remove interest rate limit
Current regulations state that a bank must use at least a seven per cent interest rate when judging a borrower's ability to pay back a loan, but the ARPA has indicated that may change soon. If that goes through, it will make getting a home loan a lot easier which means first time buyers and investors will be able to get into the market quicker.
Property value decline has slowed
The latest CoreLogic reports show that the downturn in the Australian housing market has slowed, with strong hints that the worst is over, especially in the major markets. As the decline begins to level out, we're likely to see a positive trend begin.
We talked about how to manage downturns successfully recently, and while some of these strategies will continue to be relevant we’ll soon be looking after properties with different tactics.
Auctions clearances have risen
In another CoreLogic report – this time the quarterly auction report – we've seen that the national clearance rate for auctions has risen against the last quarter. This is positive property market news for Sydney, Melbourne, Brisbane, Tasmania and Canberra, and an overall boost for capital cities as a whole.
Low supply, high demand
RealEstate.com.au wrote this month about two great factors for real estate: not many people are listing their properties at the moment, but there's lots of interest from buyers.
As any businessperson knows, when supply is low but demand is high, sellers hold the advantage. Whether you want a quick sale or a high price, you can start negotiations with confidence. In many situations, we’ll see properties sell for higher than expected in a short period of time, with many suburbs pushing for new sales records.
A new financial year has started
There are a few periods of the year when we typically see slow sales and high demand. The end of the financial year is typically slow for the real estate market, but now we're in July, that is over and we'll see more buyers and sellers acting. Spring is traditionally a strong period in the real estate market for this reason, and 2019 is expected to continue this trend.
The population is increasing, fast
The Australian population continues to grow and the end of 2018 saw a large jump of more than 400,000 residents. It goes without saying that a growing population needs homes, so real estate agents have more potential buyers for their properties.
The population is currently at more than 25,400,000 – according to the ABS population clock – and government forecasts that this will be between 28.3m and 29.3m by 2027, meaning the real estate forecast for the next five years in Australia is strong.
So our advice is to take advantage of this confidence while it lasts.
"It’s not what you make, it’s what you keep that counts."
‒ Paul Davies, Founder and CEO