As we head into the colder months the surprises in the property market certainly haven’t cooled down.
The first event was the startling scrapping of the Capital Gains Tax. And now, we’ve been witness to the significant decision by the Reserve Bank to lower the OCR. Its alteration from 1.75% to 1.5% is the first time that it has been changed since November 2016. As a country, we were almost at the point where it wasn’t news to say: “The OCR rate remains unchanged.”
What does this mean and how will it affect the property market? In reality, it’s likely to be a combination of results from the decision that will influence the market. There was definitely a wave of mortgage cuts following the announcement, but they certainly didn’t match up to the level of the OCR cut itself.
Of more impact is the signal that the OCR reduction sends to the market and the positive effect it will have on banishing uncertainty and a lack of confidence. More certainty in the market is likely to result with the sign that interest rates will remain low for the foreseeable future. This, combined with a healthy number of listings in all price brackets, may be the very factor that encourages buyers to take the next step and commit.
For first home buyers, there’s a little more flexibility in being able to purchase a home whose price may have been a little out of reach before. Low-interest rates improve the ability to service a loan, and can get them over the line with bank lending levels.
The lowering of the OCR, together with buyer confidence, low-interest rates and the feedback we’re receiving from both buyers and sellers is signifying that the 2019 winter property market is going to be pleasantly warm.