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Hear the latest weekly insights into the property market via podcast by Rich Harvey, CEO and founder of Propertybuyer.

 
Fri 24 May '24 with Rich Harvey Granny Flats: Boost Your Yields & Faster Mortgage Repayments
 
 
Fri 3 May '24 with Rich Harvey Unpacking the Northern Beaches with Incredible Agents
 
 
Fri 29 Mar '24 with Rich Harvey How to build a $7 Million Property Portfolio from scratch
 
 
Sat 16 Mar '24 with Rich Harvey Why Invest in Melbourne?
 
 
Mon 26 Feb '24 with Rich Harvey Sydney’s Inner West – Hotspots and Outlook for 2024
 
 
Mon 12 Feb '24 with Rich Harvey Decoding Sydney’s North Shore Market – Outlook and Opportunities.
 

 

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Cash rate at a standstill as Australian property growth slows

September 2, 2015 / Written by Rich Harvey

 

By Rich Harvey, CEO, propertybuyer.com.au

Has growth in Sydney property fallen behind Melbourne? One property commentator suggested Melbourne was the market on the rise, responding to the Reserve Bank of Australia's (RBA) announcement that the cash rate will stay at 2 per cent for another month.

The RBA​'s decision itself is hardly surprising. Economic growth is still behind where it needs to be, and a spike in unemployment in July doesn't help matters. On top of this, the strength of lending to house hunters outside Sydney and Melbourne is still middling at best. Keeping the cash rate where it is could stimulate growth in the Australian property market, and it's even anticipated by some that there will be another cut.

Where I was surprised, however, was in the comment suggesting that Melbourne was the city on the rise.

Property investment in Sydney is still pushing along very nicelyProperty investment in Sydney is still pushing along very nicely.

Suggestions of a Sydney slowdown

Responding to the RBA's decision, Domain economist Dr Andrew Wilson wrote: "Concerns of an overheating Sydney housing market are fading with local auction clearance rates falling sharply over August. The Melbourne housing market, however, continues to rise, although underlying prices growth remains solid rather than strong."

Even though the Melbourne market has undoubtedly had a strong quarter (even better than here, according to CoreLogic RP Data), the overall strength still lies with property investment in Sydney. We were singled out by RBA Governor Glenn Stevens as the area where "dwelling prices continue to rise strongly", and annual value growth for homes is currently at 17.6 per cent. In Melbourne, it's only at 10.6 per cent.

It's easy to latch onto shorter-term figures and proclaim a trend, but the proof is in the pudding - growth might have slowed a little, but Sydney is still a property powerhouse in the long-term. I have to say though, it's good to see that proclamations about an alleged housing bubble are on the way out.

House hunters find a balanced market

Malcolm Gunning from the Real Estate Institute of New South Wales noted that affordability, deposit amounts and interest rates have all gone up for people looking to buy investment property in Sydney. Remember, that's a move up from lows that haven't been seen in 50 years, and it's going to stabilise the market - not tank it.

As we move to a more balanced housing market, it's important to remember that Sydney is still experiencing fantastic growth compared to other Australian property.

The Propertybuyer
Podcast

 
Fri 24 May '24
with Rich Harvey
Granny Flats: Boost Your Yields & Faster Mortgage Repayments
 
 
Fri 3 May '24
with Rich Harvey
Unpacking the Northern Beaches with Incredible Agents
 
 
Fri 29 Mar '24
with Rich Harvey
How to build a $7 Million Property Portfolio from scratch
 
 
Sat 16 Mar '24
with Rich Harvey
Why Invest in Melbourne?
 
 
Mon 26 Feb '24
with Rich Harvey
Sydney’s Inner West – Hotspots and Outlook for 2024
 
 
Mon 12 Feb '24
with Rich Harvey
Decoding Sydney’s North Shore Market – Outlook and Opportunities.
 

 

Listen to many more
podcasts on our
Podcasts page.