IN­TER­EST RISE NOT EX­PECTED

‘NO PRES­SURE’ TO LIFT RATES

Stirling Times - - Residential -

THREE WA prop­erty ex­perts ex­pect the of­fi­cial cash rate to re­main un­changed at 1.5 per cent at the Re­serve Bank of Aus­tralia’s (RBA) first meet­ing for 2018 to­day.

Real­mark manag­ing di­rec­tor John Per­cu­d­ani said with the cur­rent “cold front” hit­ting the eastern states mar­ket and lit­tle prospect of in­fla­tion and wage growth in the short term, an im­mi­nent in­crease in hous­ing fi­nance in­ter­est rates was un­likely.

“We do, how­ever, need to be aware that the cost of fund­ing is on the rise, es­pe­cially for fixed and longer-term fi­nance,” he said.

“Re­gard­less of whether or not an in­crease will be pro­duced, this will be from a base cost of fi­nance that is at an at­trac­tive and his­tor­i­cally low level.”

Peard Real Es­tate chief ex­ec­u­tive Pe­ter Peard said the RBA was un­der no pres­sure to move the cash rate.

“In­fla­tion re­mains within the tar­get range of the RBA and while there has been strong em­ploy­ment growth over the past year, wages growth has been vir­tu­ally stag­nant,” he said.

“Also, the big banks have in­creased in­ter­est rates out of cy­cle for in­vestors, which has suc­cess­fully cooled off the boom­ing Syd­ney and Mel­bourne prop­erty mar­kets.”

Har­courts WA chief ex­ec­u­tive Paul Blake­ley also ex­pected the of­fi­cial cash rate to re­main un­changed, al­though he said a rise may be pos­si­ble in the last three to six month of 2018, de­pend­ing on the eastern states’ mar­ket.

“The larger states have had a good cou­ple of years in re­la­tion to value in­creases and if this con­tin­ues the RBA will want to bring the heat out of the mar­ket, which may mean a slight in­crease,” he said.

Mr Per­cu­d­ani also be­lieved there was the po­ten­tial for rate rise in late 2018 or early 2019.

“This will of course de­pend solely on eco­nomic con­di­tions, which are look­ing in­creas­ingly favourable at a time when there is high liq­uid­ity in the global mar­ket,” he said.

“Look­ing closer to home, we must also take into ac­count the drive for tax cuts which could po­ten­tially in­flu­ence the RBA to con­sider in­ter­est rate changes.”

Mr Peard ex­pected rates to re­main sta­ble.

“In this en­vi­ron­ment, the RBA wants to con­tinue to en­cour­age con­sumer spend­ing through a low in­ter­est rates regime,” he said.

Any in­ter­est rates rises were not ex­pected to have a sig­nif­i­cant ef­fect.

“Con­fi­dence in res­i­den­tial prop­erty is as high as it’s been in some time,” Mr Blake­ley said.

“We have seen im­prove­ment dur­ing the last six months of 2017 and we ex­pect that to con­tinue into 2018.

“Also, banks are con­fi­dent Paul Blake­ley enough to ag­gres­sively tar­get the res­i­den­tial prop­erty mar­ket; one of the Big Four has just in­tro­duced a vari­able rate of 3.5 per cent, which is the low­est we’ve seen in nearly 60 years.”

Mr Per­cu­d­ani said al­though changes to in­ter­est rates had a di­rect and im­me­di­ate ef­fect on the prop­erty mar­ket, there were other fac­tors to con­sider, in­clud­ing em­ploy­ment se­cu­rity and pop­u­la­tion growth, which went handin-hand to drive de­mand.

“Col­lec­tively these fac­tors are look­ing pos­i­tive for the WA mar­ket,” he said.

“It should also be noted that any ad­just­ments in in­ter­est rates are likely to be mar­ginal and this, com­bined with the af­ford­abil­ity of the lo­cal mar­ket, sug­gests a promis­ing po­si­tion.”

Mr Peard said Perth was one of the most af­ford­able cap­i­tal cities in Aus­tralia for home­buy­ers and the sta­ble in­ter­est cli­mate helped re­in­force con­sumer con­fi­dence.

“Peard Real Es­tate Group has seen this grow­ing con­fi­dence trans­late into greater ac­tiv­ity, es­pe­cially by first-home­buy­ers who can now se­cure home loans to buy es­tab­lished homes for around 3.5 per cent,” he said.

John Per­cu­d­ani

Pe­ter Peard

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