I recently saw the latest RP Data Monthly Property Market and Economic Update, which shows that Australians have $5 trillion tucked away in residential property – more than double the combined amounts washing around in superannuation ($1.62 trillion) and listed stocks ($1.5 trillion).
With so much money invested in bricks and mortar, it’s no wonder that our current low interest rate environment, combined with long-term pent-up buyer demand, has residential property back in the headlines for all the right reasons.
To date, real estate is playing its part in underpinning Australia’s economic health and wealth, with RP Data reporting that combined capital city home values have increased by 7.9 percent over the past 12 months, with Sydney (11.6 percent), Melbourne (7.8 percent) and Perth (6.9 percent) leading the way.
Further to this, the Reserve Bank of Australia’s (RBA) decision to leave the official cash rate on hold at 2.5 percent in November will enhance the surging real estate market. Leaving rates on hold is a clear sign that eight cuts since November 2011 have hit the mark with consumers. The RBA’s decision also represents a stamp of approval for the Australian economy, coming on the back of improved retail spending data, and news our capital cities continue to record very strong auction clearance rates, which is a sure sign of the buyer demand for quality real estate.
I expect that for those vendors who have been sitting on the fence, the November judgement by the RBA will give them the confidence to make a move, and will see a bounce in the number of homes listed for sale. A late rush to list homes will push the traditional Spring selling market out to Christmas and beyond, especially with plenty of buyers, buoyed by stable interest rates, looking to pounce on quality homes.
This extended Spring market also has implications for those in the real estate industry who may be considering winding down for Christmas. Many will need to reconsider how they operate their offices over the upcoming summer break, as it could be a robust next six months for real estate, especially now many experts are predicting the next move for interest rates is up.
Angus Raine is a leading commentator on the Australian property industry and has been CEO of the Raine & Horne property group since 2006.