The Reserve Bank of Australia has decided to keep the official cash rate on hold at 2.5 per cent at its June board meeting. This is the tenth month in a row where the RBA has signalled a hold on the cash rate, creating a period of stability on interest rates that continues to stimulate property market activity around the country. Property markets in all capital cities have been running hot, with record numbers of auctions being held in our capital cities during May. In Sydney, 3,411 homes were auctioned over the month, with auction clearance rates around 79 per cent. In Melbourne, a whopping 4,456 auctions were held, which is the highest number of auctions ever conducted in May in a metro area. Despite the high number of listings, Melbourne’s auction clearance rate remained over 74 per cent. For the last three months, median house prices rose by an average of 0.7 per cent across all capital cities. However, the higher number of properties available on the market has caused growth in median house prices to fall by almost 2 per cent over the month of May. Analysts agree that other factors that may have influenced home prices to fall slightly in May include normal seasonal adjustments as the market slows down prior to the winter months, and slightly lower consumer confidence in light of the federal government’s recent Budget cut announcements. Melbourne’s median house price recorded the biggest adjustment in May, dropping by 3.6 per cent. Sydney’s dropped by 1.1 per cent, Brisbane’s 1.7 per cent, 1.8 per cent in Adelaide, 0.8 per cent in Perth and 0.6 per cent in Hobart. Only Darwin and Canberra showed marginal increases in median house price growth during the month. It should also be noted that year on year, capital growth on median house prices is still up by 10.9 per cent around the country. House prices are up by 11.2 per cent nationally and unit prices are up by 8.4 per cent. And in the two year period since the start of our current growth cycle in June of 2012, median house prices in Australia’s capital cities have grown by an average of 13.9 per cent! Analysts predict that these figures look set to slow over the next year, influenced by the prospect of interest rate rises towards the end of 2014 or early 2015 and the increasing number of new building approvals. Over the past 12 months, building approvals for units has jumped by 26 per cent and for houses, 21 per cent. This is great news for first home buyers as housing affordability looks set to improve. Meanwhile, homeowners, property buyers and investors have been making the most of the current low interest rate environment to get ahead. Lenders are offering some very competitive loan products to those looking to refinance, purchase their first home or invest. Whilst the recent growth in property prices seems to have slowed to more reasonable levels, we can expect our property market to remain strong for the foreseeable future. To find out how you could be taking advantage of the situation to get ahead, talk to us today. Sincerely, The TAG Team
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