Why tax breaks for retirees could be key to shaking up supply
Is a significant real estate bottleneck being caused by older Australians hanging on to their properties, rather than li...
Real estate industry leaders believe a rate cut is on the cards, despite the Reserve Bank of Australia’s decision to keep the cash rate on hold at yesterday’s board meeting.
1300HomeLoans managing director John Kolenda says a strong argument remains for cutting rates some time in 2016.
“Home loan customers are best advised to be proactive rather than wait and see whether the RBA takes any action going forward,” Mr Kolenda said.
“While we expect any movement from the central bank to take rates down, it’s also uncertain whether lenders will pass on any reductions in full or even at all.”
Mortgage Choice chief executive John Flavell also said future rate cuts should not be ruled out.
“There continues to be a significant level of volatility in both oil prices and the share market. If this market volatility starts to have an impact on consumer and business confidence, we may see the board react via another rate cut,” he said.
“Many analysts are already pencilling in at least one more rate cut before the end of the year.”
CoreLogic RP Data research director Tim Lawless said if the RBA were to provide another cash rate cut later this year, they “probably wouldn’t need to worry too much about overstimulating the housing market”.
“Mortgage rates are already higher than a year ago due to the higher capital requirements implemented by APRA and the pace of investment credit growth is tracking well below the 10 per cent speed limit imposed in December 2014,” he added.
“With inflation tracking around the bottom of the RBA target range of two to three per cent, the Reserve Bank can work to stimulate the economy by dropping the cash rate further if they see a requirement to do so.”
LJ Hooker chief executive Grant Harrod said a further reduction of interest rates will not cause another property boom, but warned fewer listings means more pressure on prices, particularly for freestanding homes in inner and middle ring suburbs.
“The RBA likes to look at affordability and while low interest rates are helping people get into the market, what is driving price is the massive shortage of stock, not investors or people speculating,” Mr Harrod said.
“The market is still down significantly on listings especially if we look against the last five- to 10-year average.”