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Real Estate Market Update

By Paul Nees

As always, buyer sentiment is heavily influenced by the combination of local area market conditions and the overall macroeconomic environment. The Reserve Bank’s decision last week to leave the official cash rate on hold at the historical low of 1.5% was widely expected amid the current low inflation environment.

News.com.au reported further cuts are still on the cards, with 47% of economists and experts surveyed by Finder.com.au predicting another downwards move by 2017. According to the report, 39% expect the cash rate will bottom out at 1.25%, with one in five predicting a low of 1% and one in ten expecting it will go even lower.

The ABC reported seasonally adjusted figures from the Australian Bureau of Statistics showed property investors continued to embrace the RBA’s May cut, with new investment lending rising 0.5% in July. But the value of owner occupier loans slumped by 3.1% over the month, with JP Morgan economist Tom Kennedy terming the overall data “disappointing”.

Meanwhile, the property market continues to be highly segmented. The most recent report from SQM Research revealed the number of properties for sale across the country fell during August by 4.3%, with year-on-year volumes down by 0.4%. Hobart recorded the largest monthly fall, down by 7%, while Sydney listings are up by 12.3% compared to August last year. But managing director Louis Christopher said sale volumes are expected to rise across spring, with the latest indicators on both listings and asking prices suggesting the national housing market is not showing any major uplift in activity at this time. According to Christopher, the stronger markets are Melbourne and Hobart, with the weaker markets being Perth and Darwin.

The latest finalised auction report from RP Data revealed clearance rates of 79% in Melbourne, 81% in Sydney, 52% in Brisbane and 79% in South Australia. Volumes in other capital cities were too low to yield meaningful averages.

In overseas news, Yahoo has reported on recent research from Deutsche Bank that says the current economic era is coming to an end. In the bank’s latest Long-Term Asset Return study, strategists argued that the current economic age, begun in the 80’s, has been characterised by globalisation, boosting growth and increased productivity. Conversely, the group says the world is now staring down more than three decades of subdued growth, lower profits, higher inflation and dwindling global trade.

With future conditions as difficult to predict as ever, we encourage you to carefully review all activity around your property this week in light of the current environment.

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