GOOD NEWS FOR THE PROPERTY MARKET

The Reserve Bank cut rates by 50 basis points this month. All 4 of the big banks have passed on some of the cut with NAB passing on 32 basis points, Westpac passing on 37 basis points, the CBA cutting their rates by 40 basis points and the ANZ by 37 basis points.

Has this rate cut made a difference to the property market? The answer is most definitely yes, but to what extent is not yet known. I think it will take a couple of months to see the full effect. Any changes we do see in the property market however will not be purely down to interest rates though. As I mentioned in some of my previous newsletters and blog posts all the data seems to indicate we are going through a period of stabilisation and this is further evidence of that.

I do think the rate cut will especially encourage property investors and in particular those who have had cash on deposit at the bank. With rental yields strengthening and interest earned on deposits dropping investment property has now become more attractive.

Many economists feel there is still room for further interest rate cuts down under and the Reserve Bank of Australia (RBA) could be in agreement. Although the RBA did not explicitly say that it would sanction further cuts to interest rates in its minutes released yesterday, it didn't rule it out either.

Auction clearance rates for Sydney the last two weekends were in excess of 60%, the highest we have seen for some time. Even though stock levels are at relatively low levels, as is traditional for this time of year, clearance rates are however much higher than they were for the same period last year

Jobs data has also just been released. Australia’s unemployment rate came in at 4.9% according to the Australian Bureau of Statistics, the lowest since April 2011.

The Austalian Bureau of Statistics released consumer confidence data this week which is also improving slowly, with retail sales up 1.2 per cent in March.

According to Residex, house prices rose on the lower north shore by 3.79% during the first quarter of 2012 with most of the growth taking place in March. The data for April showed a decline in house prices across all capital cities, however from my experience April is traditionally one of the months with the least number of property transactions so the data may be slightly skewed.

The Australian Dollar dropped below parity this week. Australia has become more attractive for International Buyers to invest in Australia. Over the past few years we have seen exchange rates effect the buying behaviour of overseas buyers.