A General blog by Paul Bennion.
The decision by the Reserve Bank of Australia (RBA) to cut interest rates again at its June 2012 meeting is welcomed news for the Australian property market, says DEPPRO Managing Director Paul Bennion.
According to Bennion, the recent falling interest rates combined with the global economic uncertainty and highly volatile stock market should boost activity in the local investment property market and help underpin demand for real estate in the coming year.
“These falling interest rates should reverse a trend which saw a decline in activity by property investors caused by rising interest rates in previous years,” said Bennion.
Since November 2011, the RBA has announced four official interest rate cuts. This follows a period from late 2009 to 2010 in which rising interest rates made it difficult for investors to secure the necessary finance to purchase property.
“Between October 2009 and September 2010, there were seven interest rate increases of 0.25%, bringing the cash rate up to 4.75%. This resulted in a decline in activity by investors in most real estate markets in Australia.”
“But with interest rates falling recently, property markets throughout Australia should expect a boost in activity,” Bennion predicts.
This timing of lower interest rates also coincides with the fact that rental vacancy rates across Australian cities have also been falling due to fewer homes being constructed and increased demand for rental properties.
“DEPPRO believes that rising rental yields combined with falling interest rates and very competitive property prices are a financial trifecta which will result in renewed activity by property investors during the coming financial year,” Bennion says.