Low interest rates aren’t likely to last for much longer – with news interest rates could be about to rise. Early next year could be the point that the Reserve Bank of Australia changes focus from lowering interest rates to lifting them, according to financial comparison website RateCity. It says the gap between fixed and variable mortgage rates is narrowing, which indicates lenders think rates are close to bottoming out. RateCity says fixed rates usually indicate the market sentiment and are typically one step ahead of the official cash rate. However, there could be one more interest rate cut this year, on Melbourne Cup Day.
Meanwhile, the Sydney auction clearance rate continues to climb. The auction clearance rate recently hit 87.6 per cent, which is easily the best result so far this year. The average auction clearance rate now sits at 83.2 per cent, but some suburbs on the central coast, the east and the northwest are actually achieving 100 per cent clearance rates. Sydney house prices have now increased by seven per cent over the past 12 months, according to RP Data, with the median house price sitting at $680,000… so it’s great news for investors who purchased property 12 months ago but not so great for those trying to enter the market at the moment and I guess it shows that it’s always better to buy counter-cyclical.
Rising stock levels indicate seller confidence. An increase in Australia-wide listings shows sellers are more confident about the property market, according to SQM Research. Year on year, Australia recorded declines in listings in every capital city besides Brisbane and Darwin. However, stock for sale in Sydney increased by 9 per cent during August, which could indicate sellers are becoming less desperate.
Finally home lending is also on the rise. Home lending rose for the third consecutive month in July, according to the Housing Industry Association. There were more than 8000 loans to owner-occupiers for the purchase and construction of new homes, which is the strongest result since 2010. The number of loans was also 15 per cent higher than the same time last year. HIA says it’s a good result but the lack of strong momentum for the construction component over 2013 is still a bit disappointing.