THE Reserve Bank's interest rate cut of 50 basis points to 3.75% is long overdue and been welcomed by the property industry.
Australian Property Institute Victorian president Justine Jacono said the move by the RBA will help stabilise a flat lining Victorian property market.
She said the Victorian property markets – both commercial and residential – have been lagging behind Australia’s property cycle in terms of values and activity.
Jacono added that the rate cut will also assist a flagging retail sector.
“The biggest factor influencing consumer confidence continues to be world economies, which remain volatile. Therefore, these factors will continue to have an overriding influence on all financial, retail and property markets until they stabilise.”
Australian Property Institute Queensland president Philip Willington said the interest rate cut was desperately needed to stimulate an Australian property market that has flat lined since December last year.
“The Queensland market has been suffering from a crisis of confidence for over 12 months. This rate cut is needed to at least inject some incentive for potential buyers to enter both the commercial and residential property sectors,” he said.
Colliers International research director Mark Courtney said more cuts are needed.
“I would expect there will be a cut of around another 25 basis points over the coming months – and the property industry is looking forward to this drop.
“These cuts are needed to get things moving in the property industry, especially since the banks are not likely to pass on the full cut to their customers,” he said.
Courtney said if the banks do not follow suit and pass the cash rate cut, then the RBA’s official interest rate drop is meaningless for the property market.
He pointed out that QLD especially is on the cusp of some big economic growth flowing on from the resources and mining boom but drops in interest rates are imperative for the boom to flow on to the property market.
“But if the financial sector doesn’t synchronise with the RBA and what is happening in the economy by dropping interest rates, the state could be in a situation where there are genuine opportunities in the property market but no funding available or if there is funding available, it costs too much, and therefore the property sector will not grow along with the economy.
“Rather, we need to be in a position where property firms can start getting prepared for an uplift in the market and prepare to do projects and developments,” he concluded.
Property Review
