Posted in: Insights
The Reserve Bank of Australia's decision to cut the cash rate from 4.75 per cent to 4.5 per cent on Melbourne Cup Day could give prospective buyers confidence in the Australian housing market.
Commenting on Wednesday (November 2), Housing Industry Association acting chief economist Andrew Harvey asserted that the rate cut could be the first step "to an eventual recovery in new home building".
He explained that in addition to supporting buyers by reducing monthly home loan repayments, the rate cut could also provide useful insight into the future of the industry.
"This is not just because it will save around $50 a month off the average mortgage, but more importantly because it should help boost confidence as homebuyers realise rates are no longer on an upwards trajectory," Harvey said.
New HIA figures indicate that seasonally-adjusted new home approvals were up in South Australia in September by 11.3 per cent.
This compares to falls in most other states and territories, including a 13.5 per cent drop in Victoria, a 12.7 per cent fall in Queensland and a 32.2 per cent decline in New South Wales.
Warmer weather may see continued improvements in the SA property market.
June quarter data released by the Real Estate Institute of South Australia (REISA) indicated that sales volumes were down by 22 per cent on the same three-month period in 2010.
Spring, however, often signals a pick-up in the housing market. This, coupled with the fact that median Adelaide and SA house prices have remained relatively steady over the past few months, could signal stability over the long-term.
"Interstate, there have been considerable reversals in price growth, but South Australia has shown that whilst things are slow, the stability of our market still remains," said REISA president Greg Nybo earlier this year.