Prospect of another rate fails to spark property market

Warmer weather and the prospects of another interest rate cut have done nothing to entice home buyers back into the market, with the weekend’s auction rates either stable or declining.

Warmer weather and the prospects of another interest rate cut have done nothing to entice home buyers back into the market, with the weekend’s auction rates either stable or declining.

After enjoying a few weeks of solid growth, Sydney’s clearance rate dropped from 60% to 58%, with 91 properties under the hammer totalling over $42 million in sales.

Melbourne’s warm weekend wasn’t enough to sustain last week’s clearance rate of 76%, with that city’s rate dropping to 68% with 485 auctions.

Brisbane recovered from last week’s massive 33-point drop, moving from 29% to 30% with 30 properties cleared totalling over $4.8 million. Adelaide’s rates declined from 43% to 13%, with just six properties on offer.

But home owners and prospective investors should be encouraged back into the market by tomorrow’s widely expected rate cut by the Reserve Bank.

Experts predict the official cash rate could be slashed by up to 0.5%. It would be the first cut of this size since 2001, during the last economic slowdown.

Real Estate Institute of Australia president Noel Dyatt says any effects an interest rate cut would have on the market are hard to predict.

“On its own, the confidence should return, but since the last rate cut of course we’ve had the compounding of the sharemarket collapse and the problems with the American sub-prime that have really come to the fore. So obviously that’s another effect,” he says.

“I think those rates will certainly provide some confidence back into the market, but I tend to suspect that people are going to sit back a little bit and see what happens.”