This articles was first published via The Australian SAMANTHA HUTCHINSON
Picture: Matthew Bond, at his home in Teneriffe, Brisbane, says he is considering buying an apartment at Burleigh Heads. Picture By: Lyndon Mechielsen
Homeowners and potential home buyers throughout the country are capitalising on the Reserve Bank’s historic interest rate drop to buy new homes and extend their property holdings to beach houses and weekenders.
Brisbane-based homeowner Matthew Bond will now cast his net to the holiday hotspot of Burleigh Heads on Queensland’s Gold Coast, following the RBA’s decision to cut the cash rate to an unprecedented low of 1.5 per cent.
“It’s got to that point where it’s cheaper to buy an apartment down there than renting in the high season,” Mr Bond told The Australian.
“And while the rental yields are dropping, it’s almost a no-brainer.”
The Brisbane-based developer already owns a four-bedroom home in the inner Brisbane suburb of Teneriffe, which he has locked into a fixed-rate home loan on an interest rate of 4.1 per cent. He is now looking for an apartment in a beachfront complex and believes he can get financing on a similar rate in an environment in which banks are increasingly willing to lend to local investors after a period of bearishness.
“Banks are pulling back on development lending and they’re looking for a way to build up their (lending books), so I figure it’s a good time,” he said.
Agents along the eastern seaboard responded to the decision with predictions it would turbocharge property prices in Sydney and Melbourne, where there is a dearth of existing homes and apartments on the market. In other cases, it is likely to prompt homeowners to take the plunge on weekender and coastal properties, stoking prices in markets outside capital cities.
“Rates are already pretty low, but don’t underestimate the impact that this will have convincing owners that now is a good time to build on their portfolios,” Brisbane-based agent Damon Warat said.
“Banks are likely to pass a fair whack of this on, and when we’re under the impression that rates will stay low for a long time, it means for a lot of people that a second home becomes affordable.”
Major banks including NAB and CBA dropped mortgage rates in response to the announcement, but lingering wariness about the sustainability of house price growth prompted some lenders not to pass on the full 25-basis-point cut.
The cut is likely to be felt in capital city markets, particularly in Sydney and Melbourne, where buying and selling momentum continues to build.
Sales at Sydney’s Bresic Whitney agency are up 16 per cent on this time last year, with prices up to 10 per cent higher because a scarcity of stock in Sydney’s inner ring means that buyers are fighting harder to seal deals.
“This decision will only spur more buyer activity,” owner Ivan Bresic said.