The Federal Election could be the final hurdle for fence sitting property buyers looking to make a run at the market, according to property advisers.
Chris Gray, director of property consultancy Your Empire, says the recent rate cut will boost the market, but many buyers are waiting on the election result before they start getting serious about investing.
“I think almost no matter what happens at the election, there’s no more excuses. Rates are down far enough and there’s nothing else on the horizon, so people will think ‘I might as well go for it’.”
Gray says buyer confidence will be bolstered because uncertainty is removed for the next three years.
“For most people, they’ll sit on the fence rather than have a reason to do something, so that’s why I don’t think it really matters what the result is.”
Gray’s comments come on the back of the Reserve Bank of Australia’s (RBA) decision to reduce interest rates again with the official cash rate now at 2.5 per cent.
Peter Bushby, president of the Real Estate Institute of Australia, says markets around the country remain mixed but agrees the election will stimulate buying decisions.
“You’ve only got to look at the amount of stock that’s on the market at the moment, its quite reduced and a clear indicator that people are holding back… I think that the election is potentially going to be close, so people are sitting back and waiting.”
Bushby says a Federal Government result will free up markets to start moving again.
“It’s going to take the election out of the way before people really come back into property in a serious way. They won’t make commitments until they can see what the outcome is, then they can get on with life.
“When there’s a change of government looming, it’s just another piece of the jigsaw that’s not in place for people.”
Bushby says buyer perceptions on elections are about assurance.
“The biggest overriding factor is the confidence factor. People have just got to feel comfortable that if they’re going to go out and extend their financial commitment with a new house, or they’re going to borrow for the first time in a significant way, that they’ve got the capacity to pay for it.”
In his statement announcing the decision, RBA Governor Glenn Stevens says the move reflected the current economic climate, but there’s still room to reduce interest rates further.
“In Australia, the economy has been growing a bit below trend over the past year. This is expected to continue in the near term as the economy adjusts to lower levels of mining investment.
“The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time.”
Reproduced in full with permission: Australian Property Investor Stronger market awaits election outcome 8 August 2013
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