The good news for homeowners and investors continued today with the Reserve Bank cutting the official cash rate by 25 basis points to a historic low of 1.25%.
“This decision follows hot on the heels of APRA calling on lenders to scrap the 7% mortgage interest rate test and the Federal Election result that has ensured that property tax benefits such as negative gearing and the 50% capital gains tax discount are maintained,” said Angus Raine, Executive Chairman, Raine & Horne.
“Many of the offices I have spoken to or visited over the last two weeks are reporting their phones started ringing again on the Monday morning after the election. This result underlines once again that consumers don’t like uncertainty.
“The decision by the central bank today will have a similar result on buyer confidence and throw in the Federal Government’s new First Home Loan Deposit Scheme announced during the Federal Election campaign, and the short to medium term outlook for Australian property markets is much stronger than even a month ago.
In welcoming the cut in the official interest rate, the Real Estate Institute of NSW President Elect Brett Hunter, also Director of Raine & Horne Terrigal agrees the RBA’s move will help affordability for first home buyers.
“The caveat is that the banks must come to the party and pass this rate cut on in full,” said Mr Hunter.
“First home buyers have all the power in the market right now. They have all the support from the government, the central bank, the lenders, and there are plenty of incentives aimed at first-timers seeking to buy off the plan property.
“However, the trouble is empty nesters don’t have the incentives to move, which is hindering the housing plans of upgraders and first-time buyers.
“We need governments to look at ways to provide last-time buyer incentives to help encourage the empty nesters to downsize.
“Tax incentives have been proven to work for first-time buyers. Now is the time to try to encourage empty nesters to move through tax incentives.