What does the November rate cut mean for your property search?
While perhaps overshadowed by the drama of the looming US Election, and the glitz and glamour of the Melbourne Cup, in a board room in Sydney today a decision was made that may have wide ranging effects, both positive and negative on anyone buying or selling a property. The move to lower the cash rate in order to stimulate the economy following the release of last month's federal budget has been seen by most as a necessary one.
The resilience of Australia’s housing market has been nothing short of remarkable during COVID-19. CoreLogic says September marked a striking turn in market sentiment, with consumer confidence rising, a jump in new listings, and rising home values recorded across six of our eight capital cities.
A drop in cash rate has usually brought with it a surge in buyer numbers due to the knock on effect rate cuts have when it comes to borrowing capacity, however here is my list of the top 3 things this may mean for your property search...
1. Increased consumer confidence:
With a drop in the cash rate, often comes an uptake in housing affordability, as money becomes cheaper and buyer's borrowing capacities rise. This generally works positively on both sides for buyers and sellers. As increased borrowing capacity usually encourages home owners to upgrade their properties, resulting in more stock on the market, however generally with fiercer competition.
2. Rates are low, and likely to stay that way:
Most economists are predicting that we will see a low rate climate for at least the next 10 years, with the RBA indicating today that it will keep rates on 0.10% for at least the next 3 years. This is great news for buyers who are needing to finance a purchase, as it is likely to provide a great opportunity for these buyers to pay down their loan over this time & develop equity in their property.
3. The stars are aligning for the end of 2020, and start of 2021:
The RBA Rate cut, along with additional stimulation measures from the Federal Government are shaping up an opportunity filled end of year for the well equipped buyer. Sentiment on both sides of the real estate transaction is improving post COVID, and consistently high auction clearance rates demonstrate the resilience of the Sydney property market.
Sales agents have 2 weeks left of 2020 to list and sell property, prior to the end of the year. Following the next two weeks, agents will be turning their attention to listing property for campaigns in 2021. Most importantly, this means that over the next 3 months, many of these properties will be available off-market, making for an excellent opportunity for the prepared buyer.