- The RBA cut the official cash rate to 1.25% per annum and flagged in its minutes of its most recent meeting there will be more to come. This is the first move since August 2016 but is the 13th cut in this cycle that started back in November 2011 when the RBA official cash rate was 4.75%.
- Property prices have reduced in the most recent cycle by up to 10-15% in Sydney and Melbourne with smaller declines in the other major capital cities. We expect to see a further slowing in the rate of price declines over the next few months, at which point we believe prices will stabilise and then start rising modestly.
- The recent federal election has removed uncertainty for both home buyers and sellers with the newly elected coalition government maintaining the status quo on property- related tax policies.
- The banking regulator APRA has flagged it will lower its serviceability rates for lenders. Whilst this is still in consultation phase it is expected to have a positive impact on the supply of credit towards the latter part of this calendar year as lenders adjust their policies to accommodate a lower rate for serviceability calculations.
Generally speaking, all of the points in isolation and certainly combined are positive for the property market. This current correction has generally taken homes to prices where they were 5 years ago. Historically speaking it has been a soft correction and now with the election uncertainty behind us, interest rates decreasing and banks having the ability to perhaps revise some of their credit policies (a number of lenders have publicly acknowledged that in the wake of the royal commission their policies did swing to become too conservative) the seeds have certainly been sown to support the property market and economic growth generally.
If your considering taking advantage of the current positive signs to enter the property market or if you want to ensure your current finance arrangements are competitive with the market our lending team are happy to assist. They work hand in hand with your Prosperity advisers and would be pleased to conduct a no-obligation mortgage review for you. Alternatively, if you are looking to make a property purchase, speak to one of our lending advisers who will be able to navigate the process for you from initial loan application all the way through to settlement.
Contact Alex Warian for more information on 02 8262 8756 or awarian@prosperity.com.au.