There is now more security and growing investor confidence in the property market, making it a safe investment option, according to LJ Hooker Kalamunda & Foothills Principal Grant Winning.
“The economy is growing at a more sustainable rate than forecast and there is still current volatility of the national and international stock markets,” Grant said.
He said that these factors, combined with lower interest rates, an expected increase in Kalamunda & Foothills population, and a continued strong economic outlook for WA, means there is now stability and greater confidence in our property market.”
The Reserve Bank Board cut the cash rate by 25 basis points (quarter of a percentage point) to 3.50 per cent this month. The previous rate cuts were in May (50 basis points) and November and December 2011 (each by 25 basis points).
“The Reserve Bank now looks more closely at the variable housing rate to gauge how close rates are to ‘normal’. Currently the variable housing rates of major banks are around 6.95 per cent, slightly below the long-term average or ‘normal’ rate of 7.20 per cent. The RBA says that “interest rates for borrowers have declined to be a little below their medium-term averages.” In other words stimulus is still very modest,” Grant said.
“The recent decreases in the cash rate, together with higher rents and a low vacancy rate, also mean yields improve and make property more attractive to investors,” Grant said.
“With each rate cut, savers are presented with more choices. It may have been safe to leave money in the form of cash, but is it still the smart decision?” Grant said.
“The rate cut is great news for the residential property sector and should boost demand for property by investors and owner-occupiers alike.
“Fundamental demand for property is strong and supply is lagging, ultimately putting more pressure prices where we are seeing moderate increases.”
Grant Winning, Principal
LJ Hooker Kalamunda & Foothills
M: 0412 203 285 P: 9293 0011