Strong sales activity across WA’s housing sector combined with today’s cut in interest rates are expected to provide a big confidence boost to the local market.
The Reserve Bank of Australia cut the official interest rate by 0.25 percentage points to a record low 0.75 per cent, with many economists predicting it would remain low for at least another two years.
Pulse Property Group director Di Addenbrooke said the cut to interest rates was good news for homeowners and investors.
“If the banks pass this on, it means repayments on a $500,000 mortgage would drop by an average of about $70 a month,” Di said. “There are some very well priced properties around at the moment. And Spring is the perfect time to list a property under these very ideal market conditions.”
In another positive sign, REIWA has reported a 24 per cent increase in sales across Perth.
Last week’s strong sales activity — 675 transactions compared to 551 the previous week — was the highest weekly reading since August 2017.
Willetton was among the top 10 suburbs for sales last week, with other nearby communities also performing strongly.
Announcing the rates cut this morning, Reserve Bank governor Philip Lowe said the economy still had “spare capacity” and lower interest rates would help make inroads into that.
Dr Lowe said this low level of interest rates, recent tax cuts, ongoing spending on infrastructure, signs of stabilisation in some established housing markets and a brighter outlook for the resources sector “should all support growth”.
“The board will continue to monitor developments, including in the labour market, and is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time,” he said.
Macquarie senior economist Justin Fabo said property prices now appeared to be on an upward trajectory.
“Perth is still well off the peaks of several years ago. But the rate of decline has slowed in recent months,” Mr Fabo said.
Macquarie’s September Property Insight predicts national house prices would rise at least 5 per cent by the end of 2020.