RATE HOLD MAY BOOST PROPERTY MARKET

I agree with Charles Tarbey and believe that the decision by the Reserve Bank of Australia (RBA) to hold interest rates at 2.75 per cent will encourage many people to purchase or refinance property as rates remain at historic lows.

“CENTURY 21 believes that the RBA’s decision to keep interest rates on hold is prudent in light of current domestic economic conditions,” said Chairman and Owner of CENTURY 21 Australasia, Charles Tarbey.

“With interest rates set to remain at historic lows for the time being, Australia’s lending environment should encourage many people to buy or refinance property over the coming months.
“However, whether there will be further rate cuts in 2013 is difficult to predict due to the recent momentum in U.S equities markets and a period of relative stability in Europe.”

As part of its decision, the Reserve Bank reasoned that it was appropriate to leave the cash rate unchanged as current financial conditions would contribute to a strengthening of growth over time, consistent with achieving the inflation target.

The Reserve Bank’s decision follows the recent release of RP Data-Rismark’s Hedonic Home Value Index results, which showed that median home values In Australia’s capital cities fell 1.2 per cent in May.

“Despite declines in house prices in May, Australia’s residential property market has undergone some relatively positive developments in 2013, with capital city dwelling values rising 1.1 per cent over the first five months of the year and auction clearance rates moving above 70 per cent in many areas across the nation,” concluded Charles Tarbey.

NEW HOME SALES UP OVER APRIL

Recently released figures from the Housing Industry Association (HIA) suggest that the trend of recovery in new home sales seen since late 2012 has continued into 2013. 

The latest HIA New Home Sales report shows that seasonally adjusted sales for new homes increased by 3.9 per cent in April 2013. This took monthly sales back to a level not seen in over a year.

The headline result was driven by a 6.7 per cent increase in detached house sales, which was experienced across all states surveyed except for Queensland. In contrast, multi-unit sales fell by 9.4 per cent. 

HIA senior economist, Shane Garrett, said that recent developments in new home sales are an encouraging sign for the market.  “In particular, the important detached house segment of the market continues to climb out of recent record lows, and this improvement has largely been broad-based across the states,” explained Mr Garrett. 

“While multi-unit sales have softened over recent months, the gains made over the course of 2012 have not been eroded. A broader look at the situation shows that the volume of sales in the three months to April this year [was] still 51.7 [per cent] higher than the trough experienced a year earlier. 
“We do, however, need to be considering the longer term prospects of a recovery in residential construction beyond 2013,” concluded Mr Garrett. 

In the month of April 2013 detached house sales increased by 9.1 per cent in Victoria, 9.0 per cent in Western Australia, 8.1 per cent in New South Wales, and 2.7 per cent in South Australia. Detached house sales fell by 1.8 per cent in Queensland.