 Real estate market hopes to bounce back
Property markets in Australia may have breathed a sigh of relief yesterday as interest rates were cut again, but economists are warning not to get too excited just yet. Warnings that 2009 will be a tough year are not hard to find and despite mortgage rates falling, the concern over the economy is holding back sales and new development.
Australian Bureau of Statistics show that first home owners are out in force buying up property with first homebuyers represented 23.6 per cent of the housing market in November, up from 19.5 per cent in October. However, overall Australian building approvals fell 12.8 per cent in November, their lowest level since March 2001. Property prices have fallen in most states.
Access Economics' Chris Richardson says global economies are in trouble and despite rate cuts, the next 12 months will still be tough. He does however, believe that the combination of rate cuts plus the government's second stimulus package will go a long way in the right direction.
"It's not going to stop 2009 being an ugly year but it does put in place the building blocks of recovery in 2010 and that's exactly what we need to do," he said.
Official interest rates have fallen a whopping four per cent in the past six months, down to 3.25% as the Reserve Bank tries to avoid a recession. Banks and other lenders have passed on most of the rate cuts. Yesterday, the Big Four lowered mortgage rates by the full one per cent, bringing rates down below 6 per cent and some as low as 5.74 per cent. The Mortgage and Finance Association says that is the lowest rate in living memory and should help attract home buyers back into the market.
The Government is moving to implement its $42 billion rescue package this week and hopes the spending will boost the local economy.
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