Since the higher interest rates have been announced by the Reserve bank of Australia in May this year, the in Australia has seen a decrease in the prices for the residential property. Further, the investor confidence for the Australian for sale is wavering. The in Australia has seen diminishing sales and this has become the topic of hot debate in the media as well as the internet.
Real estate in Australia research firms such as Rismark international and BIS Shrapnel have also confirmed the softening of the in Australia prices. In August the average price for the house has dropped and stood at $450,000. However the firms expect that the softening of the prices would be for a limited time period only as the fundamentals of the economy in Australia are on the upswing and it has recovered from the recession that was widespread during 2008 – 09. Further there is a shortage of supply for the Australian market and this will exert some upward pressure for the prices to rise in the last quarter of 2010.
Even though the prices were down in the third quarter of 2010 in all the eight capital cities of Sydney, that include the financial capital Sydney and Canberra, the prices are still up by about 8% since the previous year. Even though the Reserve bank of Australia has increased the interest rates since the may this year, experts are speculating that that the interest rates will increase by another 25 basis points. This can lead to further weakening of the prices unless there are supply side curbs in the Australian market.
The government has also withdrawn the first home buyer grant and the home approvals have significantly dropped by around 5% in August this year, as compared to 2009. The first two quarters this year has seen a phenomenal increase this year which started in the third quarter of 2009. The jump in in Australia was around 15% after adjusting for inflation and seasonal terms. The interest rates have been hiked to prevent the real state crash that has prevailed over Europe and the US real markets.
The Australian rentals have dropped quite staggeringly this year and now stand around 4.3% as compared to about 8% in 2009. The Australian rentals even in Sydney are quite low and in line with the international rentals this year.
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Australian house prices rose more in October than in any month in the past four years, further suggesting the country’s property downturn could be over.
October’s 1.2% rise in prices was the fourth straight monthly increase and the largest since May 2015, according to CoreLogic’s Home Value Index monthly survey.
“It’s becoming increasingly clear that the housing market rebound is gathering pace,” CoreLogic research director Tim Lawless said.
The strongest growth was in Melbourne and Sydney, where prices rose 2.3% and 1.7%, respectively, but prices were up across every capital city except Perth, where they dipped 0.4%.
“Demand for housing is responding to stimulus measures, including mortgage rates that are now lower than anything we have seen since the 1950s,” Lawless said.
Australia’s four largest banks now all offer fixed mortgage rates below 3% after cuts to the official cash rate – the rate the Reserve Bank of Australia charges banks on overnight loans – in June, July and October.
Also, the Australian Prudential Regulation Authority changed the mortgage serviceability rules in July to make it easier to borrow, no longer requiring banks to determine if borrowers could afford a sudden spike in interest rates to 7.0%.