Australia interest rate cut prompts mixed reactions from industry… Laing+Simmons GM: Rate cut unnecessary to boost real estate… Queensland apartments see higher approval...
Rate cut expected to boost economy
According to an article in the Daily Mail, the historic cut to the interest rate will shave at least $50 a month in costs for households. The Reserve Bank has cut interest rates by a quarter of a percentage point to a historic low of 2 per cent. If the cut is passed on in full, home-owners with a $350,000 mortgage will save more than $52 per month, according to CommSec calculations.
The cut comes one week ahead of the Federal Government's 2015 budget, which is expected to show a deterioration in the country's finances. If retail banks pass on the cut in full, mortgages rates could fall below 4 per cent for home-owners for the first time in generations. ANZ has said it will pass on the full cut to mortgage holders.
Reserve Bank of Australia governor Glenn Stevens said the cut was designed to help Australia's economy, which is struggling to adjust to lower commodity prices and weak business investment.
Laing+Simmons GM: Rate cut unnecessary to boost real estate
It seems not everyone is in favour of the interest rate cut. According to Australia Financial Review, property experts expect Tuesday's interest rate cut to drive Australia's already-hot real estate market. Since the Reserve Bank's last rate cut in February to 2.25 per cent, Sydney's auction clearance rates have been above 80 per cent each week.
Sydney prices had already increased 14 per cent in the 12 months ended March 30, according to CoreLogic RP Data. BIS Shrapnel expects a 17 per cent rise for the full financial year and median house prices to be well above $1 million by June 2017. "The housing market in no way needed another interest rate cut today," property agent Laing+Simmons' general manager, Leanne Pilkington said.
"The market is already red hot and the RBA would have been wise not to pour further fuel on Sydney's property fire."
Queensland apartments see higher approval
Approvals of new houses and apartments rose to a record level in March, pushed by a near-18 per cent jump in apartment approvals in Queensland and growth in the smaller states, even as approvals in the larger NSW and Victorian markets fell back, according to an article from the Australian Financial Review. Total approvals rose 2.8 per cent in seasonally adjusted terms to 19,419 from 18,882, their highest since records began and equating to an annualised rate of just over 233,000 new dwellings.
While approvals do not automatically translate to the amount of flats produced, the figures are bringing out caution flags about houses the industry has the capacity to build, without sparking inflation in construction-related sectors that could flow through to other industries – many of which are already struggling to grow, according to the article.
"This is a very big number," said Saul Eslake, the chief economist for Bank of America Merrill Lynch Australia. "It's not too far away from what most knowledgeable people say is [the limit of] the industry's capacity. You can have too much of a good thing. What we ideally need is four or five years of 200,000 starts. Not much good can come from pushing up to 250,000."
According to an article in the Daily Mail, the historic cut to the interest rate will shave at least $50 a month in costs for households. The Reserve Bank has cut interest rates by a quarter of a percentage point to a historic low of 2 per cent. If the cut is passed on in full, home-owners with a $350,000 mortgage will save more than $52 per month, according to CommSec calculations.
The cut comes one week ahead of the Federal Government's 2015 budget, which is expected to show a deterioration in the country's finances. If retail banks pass on the cut in full, mortgages rates could fall below 4 per cent for home-owners for the first time in generations. ANZ has said it will pass on the full cut to mortgage holders.
Reserve Bank of Australia governor Glenn Stevens said the cut was designed to help Australia's economy, which is struggling to adjust to lower commodity prices and weak business investment.
Laing+Simmons GM: Rate cut unnecessary to boost real estate
It seems not everyone is in favour of the interest rate cut. According to Australia Financial Review, property experts expect Tuesday's interest rate cut to drive Australia's already-hot real estate market. Since the Reserve Bank's last rate cut in February to 2.25 per cent, Sydney's auction clearance rates have been above 80 per cent each week.
Sydney prices had already increased 14 per cent in the 12 months ended March 30, according to CoreLogic RP Data. BIS Shrapnel expects a 17 per cent rise for the full financial year and median house prices to be well above $1 million by June 2017. "The housing market in no way needed another interest rate cut today," property agent Laing+Simmons' general manager, Leanne Pilkington said.
"The market is already red hot and the RBA would have been wise not to pour further fuel on Sydney's property fire."
Queensland apartments see higher approval
Approvals of new houses and apartments rose to a record level in March, pushed by a near-18 per cent jump in apartment approvals in Queensland and growth in the smaller states, even as approvals in the larger NSW and Victorian markets fell back, according to an article from the Australian Financial Review. Total approvals rose 2.8 per cent in seasonally adjusted terms to 19,419 from 18,882, their highest since records began and equating to an annualised rate of just over 233,000 new dwellings.
While approvals do not automatically translate to the amount of flats produced, the figures are bringing out caution flags about houses the industry has the capacity to build, without sparking inflation in construction-related sectors that could flow through to other industries – many of which are already struggling to grow, according to the article.
"This is a very big number," said Saul Eslake, the chief economist for Bank of America Merrill Lynch Australia. "It's not too far away from what most knowledgeable people say is [the limit of] the industry's capacity. You can have too much of a good thing. What we ideally need is four or five years of 200,000 starts. Not much good can come from pushing up to 250,000."
