Record low interest rates are good news for Melbourne buyers
If you’re looking to buy property in Melbourne, we have some great news for you: the Reserve Bank of Australia decided to cut the official cash rate even further at this month’s meeting. This figure is a tool for controlling nearly every aspect of the Australian economy, and any cut to the rate could mean big things for the property sector in particular.
Standing firm
The Reserve Bank of Australia (RBA) has described the housing market in recent months as less of a risk than it was a year ago, which was a contributing factor to their decision to lower the official cash rate (OCR). Lending pressures from the Australian Prudential Regulation Authority, such as the loan to value ratios that were implemented in the middle of last year, are apparently continuing to take effect, reducing price pressures and easing the incredible climb in value that some property markets have seen lately.
This is particularly good news for first home buyers, as with the lower OCR comes lower interest rates as well. People taking their first steps into the world of real estate can expect less of a strain on their budget due to mortgage repayments. Meanwhile, with the Australian Bureau of Statistics reporting that dwelling approvals in Victoria have continued to increase over March, investors and first home buyers alike can expect a flood of new properties which may reduce prices even further.
A special mention to Melbourne
“Housing affordability remains very challenging, and homeowners deserve to receive their fair share of the rate cut.”
However, Melbourne could be seeing those properties snatched up as soon as they come onto the market, as the Real Estate Institute of Victoria describes how the median house prices in Melbourne are far lower than that of Sydney. This could drive more Sydneysiders into moving to Melbourne, particularly considering the incredible value growth that the Victorian capital has seen as a whole.
It isn’t all sunshine and roses though. Last time the RBA lowered the OCR, the major lenders did not pass the entirety of the cut onto their customers.
“We trust that such mistakes will not be repeated on this occasion,” described Shane Garrett, Senior Economist at the Housing Industry Association.
“Housing affordability remains very challenging, and homeowners deserve to receive their fair share of the rate cut.”
Melbourne still remains home to some of the best-performing suburbs in the country as well as experiencing rapid growth. You can bet that plenty of buyers will be taking advantage of the interest rate lows and start buying in some of the best suburbs in Melbourne. Whether you’re purchasing or selling a property in Victoria, make sure you get in contact with the team at Nelson Alexander for the best picks!