Low rates to boost home sales

By Gerv Tacadena

Home buyers are getting more confident to test the market, says an expert

Would-be buyers are becoming more confident in making purchase decisions amid the low interest-rate environment, says an expert at CoreLogic.

Tim Lawless, head of research at CoreLogic, said the Reserve Bank of Australia's decision to hold rates at the historic-low of 0.25% is likely to boost activity in the market.

"With owner-occupier mortgage rates for new loan originations typically between 2% and 3%, housing finance commitments have surged, and CoreLogic’s estimate of home sales over the September quarter is tracking slightly higher than a year ago," he said.

Lawless said while housing values are down by 2.1% since peaking in April, recent trends are showing stability outside Sydney and Melbourne.

"With the cash rate and mortgage rates set to remain low or reduce even further, prospective home buyers are likely to feel more confident in making high commitment purchasing decisions, such as property," he said.

Furthermore, government incentives and schemes, like the recently expanded First Home Loan Deposit Scheme will continue to boost participation from first-home buyers.

"The extra 10,000 places for new homes and apartments that the Government has put into this Scheme will ensure more first home buyers achieve their goal of owning a home sooner," said Graham Wolfe, managing director at the Housing Industry Association.

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