Buyers buck winter hibernation trend and present ready to do deals

The ACT’s property market ‘snapped back’ from the uncertainty of the Federal election with gusto and greater strength in May, fuelled by another interest rate cut.

Windrose Property Principal and Sales Agent Sam McGregor said the past month had been a busy time for real estate in Canberra.

“The snapback post-election was very clear and very real,” Sam said. “A lot of people were clearly sitting on their hands waiting to buy.

“The last month alone has been the busiest month I’ve had in real estate in terms of the volume of sales. I sold 10 properties in May and eight of those occurred in the two weeks after the election.”

Cotality’s latest Home Value Index, released this week, shows Canberra property prices surged by 0.4% in May, further strengthening the market after a run of positive growth in recent months.

The report shows it is now three years since Canberra’s last market peak, with prices down 6.4% on the cyclical high.

Yet, Canberra property values have grown almost 31% in the past five years, while the past decade has seen a hike of 60.5%.

Sam said buyers had keenly trained their attention on predictions of an interest rate cut, which translated at the Reserve Bank of Australia’s May 20 board meeting to cut the official cash rate by 0.25 percentage points to 3.85%.

He said the RBA’s decision had given greater momentum to the local market, increasing the borrowing power of the average family, and he expected this confidence boost to continue as the traditionally busy spring market looms.

“The general consensus when I’m speaking with buyers is that there has been a couple of interest rate cuts now so it’s probably a good time to buy because they know the market won’t get any weaker,” Sam said.

“I’m now meeting and speaking with a lot of vendors – new sellers – who are looking to get their houses listed, and they’re obviously those people who were waiting for that little window to clear.

“A lot of people are now looking towards spring campaigns with confidence now that the RBA is not going to keep rates obscenely high.”

Cotality Research Director Tim Lawless said national auction clearance rates had also picked up after the RBA’s decision.

“The continued momentum we’re seeing across almost all markets is no doubt being fuelled by rate cuts – both those that have already happened, but also potential cuts in the coming months,” Tim said.

“With interest rates falling again in May, we are likely to see a further positive influence flowing through to housing values in June and through the rest of the year.”

Sam said there had been an undertone that Canberra was a buyers’ market, but there was nothing to suggest that sentiment had flipped in favour of vendors. In fact, it is a more balanced market, he said.

“When you look at the numbers and it shows that we’ve had about 1% growth in the past eight weeks, that is a strong market and that’s now starting to be reflected in the way that we’re doing a deal and the way we’re negotiating,” Sam said.

“These figures probably show that spring is going to be a good time to buy. Come spring, if we see another interest rate cut or the impacts of government policy come into play, with a bit more money around it’s going to be even more competitive and I would expect this will continue until the end of the year.”