The property market will continue its steady course following today’s announcement by the Reserve Bank of Australia to keep interest rates on hold, leading real estate network LJ Hooker said.
The Spring selling season has had an encouraging start in most Australian markets as buyers look to upgrade their existing home and investors seek out rental opportunities.
LJ Hooker Chief Executive Officer Grant Harrod said the RBA’s policy of stability over the past year has aided the economy by offsetting the fall in mining investment. Interest rates are likely to remain on hold until the end of 2015.
“Economic growth should remain at trend levels over the next two years which is partly due to property, including residential construction,” Mr Harrod said.
“It has been an encouraging start to the Spring market and while buyers are aware rates won’t stay at historic lows forever, like investors, there is continued confidence about the market which is reflective of the stability in policy.
“However, while markets such as Sydney and Melbourne have performed well, there are many other markets which have softened or experience more modest results.’’
Demand for property in Sydney and Melbourne has continued to drive prices at the start of the Spring market. While stock levels have risen in the past few weeks, demand is stronger resulting in fierce competition.
LJ Hooker National Research Manager Mathew Tiller said there are a number of indicators the RBA will be monitoring such as inflation and employment to determine which action to take.
“It is definitely not one way or the other,” said Mr Tiller. “The most likely outcome is that the market will continue to enjoy this period of stability.
“Any major rise to unemployment or a significant softening in business investment could see interest rates actually fall again.”
While the RBA is considering measures to slow down house price growth, Mr Tiller warned it risks having a negative impact on residential construction which is crucial for the economy.
“Off-the-plan sales continue to be strong and are driving strong levels of construction, helping the boarder economic outlook. Any changes could do more harm to the economy than good,” Mr Tiller said.