It was announced on April 6 that although home prices across the country, and particularly on the Sunshine Coast, have increased at the fastest rate in 32 years, the Reserve Bank of Australia (RBA) has decided to hold the interest rate at a record low of 0.10 per cent.
This is great news for those looking to make a move in the property market as we expect banks to keep their rates steady with an increase from the RBA not expected for a couple of years. Buyers can secure a home with lower mortgage repayments, and sellers can expect the continued market growth with buyers able to access funds. First home buyers can break into the market with more affordable repayments, and investors can reap the rewards of lower repayments and high rental yields.
Although some in the finance space had hoped to see an interest rate rise as a means to cool the red-hot property market, RBA governor Philip Lowe has indicated he’s determined to resist such calls.
A few factors are assumed to be influencing the decision to keep the rates steady as the RBA doesn’t want a change in interest rates to rattle the economy while it adjusts to the end of JobKeeper and the JobSeeker supplement and the rollout of the COVID vaccine. When there’s evidence of a stronger labour market and wages growth we may then see the RBA make changes to the rate.
The Australian Prudential Regulation Authority (APRA) shared with Domain that although managing property prices wasn’t their role, they didn’t see the recent price jumps across the country as any threat to financial stability.
Tim Reardon, chief economist of the Housing Industry Association shared in a Domain.com.au interview that at the moment, the low interest rate is helping drive the market, along with improving economic conditions, rising confidence levels, government incentives and a lack of supply.
“But mostly, the difficulty we’re facing at the moment is a supply problem,” he said. “In a normal market, you have a happy seller and a happy buyer. Now, you have a happy seller and a happy buyer … and 19 frustrated and unhappy unsuccessful buyers. We simply need to build more houses.”
This is the scenario we’re seeing on the Sunshine Coast and what is creating such great opportunity for investors and home sellers. People are desperate for somewhere to live so rentals are snapped up very quickly and prices for both properties and rents are continuing to rise.
To understand how you can benefit from this prime property environment, get in contact with our team for an obligation-free consultation.