LOWER RATES MEAN MORE MONEY

Southern Gazette (South Perth) - - Residential -

HOME­OWN­ERS will be al­most $50 a month bet­ter off thanks to the re­cent in­ter­est rate cut.

The Re­serve Bank of Australia slashed rates for the sec­ond time this year with the cash rate dip­ping to a record-low of two per cent af­ter the lat­est fall of 25 ba­sis points.

Fig­ures show a 30-year $300,000 home loan with the av­er­age stan­dard vari­able rate of 5.25 per cent at­tracted monthly re­pay­ments of $1667.

This meant the lat­est drop would see an ad­di­tional $46 on av­er­age in home­own­ers’ hands each month.

The de­ci­sion to again cut in­ter­est rates will give a timely boost to the WA real es­tate mar­ket and help un­der­pin prop­erty prices dur­ing the com­ing year, ac­cord­ing to Ac­ton direc­tor Travis Cole­man.

“Over the past three years, of­fi­cial in­ter­est rates have more than halved and are ex­pected to re­main low for the fore­see­able fu­ture,” he said.

“This decline in in­ter­est rates, how­ever, is part of a long-term trend when you con­sider that of­fi­cial in­ter­est rates were 7.25 per cent in 2008 and now just 2 per cent.”

Mr Cole­man said the record-low rates made it a great time to buy prop­erty in Perth, es­pe­cially as it had not ex­pe­ri­enced the same boom in prop­erty prices as Syd­ney or Mel­bourne.

“Over the past year, the num­ber of prop­er­ties listed for sale in Perth has jumped by nearly 40 per cent to around 14,000, mean­ing buy­ers are in a much stronger po­si­tion to ne­go­ti­ate with sell­ers,” he said.

“With prop­erty prices re­main­ing gen­er­ally steady in WA and in par­tic­u­lar Perth, this cut in in­ter­est rates will mean that homes have be­come even more af­ford­able.”

Mr Cole­man added there was in­di­ca­tion the in­ter­est rate cut could see more first-home buy­ers buy an es­tab­lished home rather than build­ing a new one, a trend em­pha­sised by ev­i­dence of slow­ing new land sales.

“In ad­di­tion, lower in­ter­est rates will en­cour­age more es­tab­lished home own­ers to up­grade their homes as prices in the top end of the mar­ket are still very soft,” he said. “With pre­dic­tions there may be ad­di­tional in­ter­est rate cuts dur­ing the com­ing year, the out­look for the lo­cal prop­erty mar­ket re­mains very pos­i­tive as in­ter­est rates play a de­ci­sive role in the hous­ing mar­ket.”

Newspapers in English

Newspapers from Australia

© PressReader. All rights reserved.