Consumer sentiment in the residential property market is booming post the Reserve Bank of Australia’s (RBA) cash rate slash to 0.10%.
With recent Federal Government stimulus packages and successive interest rate cuts, optimism is building with many economists predicting strong growth across all capitals going into 2021.
The Domain House Price Report reveals that combined capital house prices have increased by 4.6% year-on-year between September 2019 to September 2020 .
Unit prices have also increased by 2.2% year-on-year expressing the true resilience of the Australian residential property market during the global pandemic.
Consumer sentiment continues to improve on the back of macro influences being implemented having a direct impact on the property market.
One of the most trending pieces of news for the property market in 2020 has been the latest RBA rate cut.
In early November, RBA made the unprecedented decision to lower the cash rate to 0.10% with RBA Governor, Phil Lowe stating .
“The board expects that this new lower level of interest rates will be in place for an extended period. The Board will not increase the cash rate until actual inflation is sustainably within the target range. The board is not expecting to increase the cash rate for at least three years.”
Now with these record-low interest rates it is expected that the availability of ‘cheap debt’ will make it more attractive and affordable for new entrants to the market.
Whilst interest rates look to remain on hold at historic low levels, accompanied by government stimulus and a recovering economy, continued positive consumer sentiment and potentially increased property prices can be expected for both homeowners and investors in the coming years.
Recent consumer sentiment reports have also revealed positive statistics and the overall view of optimism regarding the property market.
Confidence is being expressed by both potential buyers and sellers as the end of the final quarter nears for 2020.
ME Bank’s latest Quarterly Property Sentiment report was based on a survey conducted by 1,000 Australians .
The report revealed ‘Homeowners are less worried about the state of the property market while prospective buyers are feeling more confident about buying or selling’.
Australians are also more optimistic about property prices, with 65% predicting them to either increase in value or stay the same as the market moves post-COVID-19 pandemic.
The report found on the back of record-low interest rates, over two-thirds (69%) of property owners and buyers indicated that the recent interest rate cut ‘made buying or investing in property more attractive to them’.
Westpac’s-Melbourne Institute Index of Consumer Sentiment was also listed by 2.5% to 107.7 in November from 105.0 in October .
The Federal Government has also re-introduced an additional 10,000 places for the First Home Loan Deposit scheme for people purchasing new builds.
It is expected that the First Home Loan Scheme will have a positive impact overall as first home purchases can enter the market using a 5% deposit and avoid paying lenders mortgage insurance (LMI).
Under the new scheme, price caps have also been raised for new builds, allowing more first home purchasers to secure their primary place of residence. For instance, in Sydney, homes worth up to $950,000 will be covered by the scheme, and the upper cap for Melbourne is now $850,000.
The scheme is designed to make it easier for first home buyers to purchase a home which in turn will also stimulate the property market by bringing in the potential of 10,000 new buyers driving further demand. Read more about the First Home Loan Scheme.