Season 4, Episode 72: How Do Interest rate Cuts Impact The Property Market?

OpenCorp Founders, Matt Lewison, Cam McLellan and Allister Lewison unpack the recent rate changes and the impact this will have on the Australian Property Market. 

Interest Rate Cuts and Their Impact: A reduction in interest rates will increase borrowing power, making it easier for individuals to borrow more money. This will lead to increased competition among buyers, especially in the lower end of the property market.

Inflation and Sentiment: Inflation measures the increase in the cost of goods, and the Reserve Bank targets inflation at 2-3%. As inflation comes under control, the likelihood of interest rate cuts increases, boosting market sentiment and consumer confidence.

Property Market Dynamics: The property market is driven by supply and demand, with a long-term undersupply of affordable housing in Australia. As borrowing capacity improves, buyers can afford to pay more, potentially driving prices up.

Borrowing Capacity and Housing Affordability: A 0.25% rate cut could allow someone borrowing $600,000 to save $1,500 annually, or borrow up to $30,000 more. This could make it easier for first-time buyers to enter the market.

Competition and Price Growth: With more people able to afford homes, competition at the entry level of the market will increase, driving up prices. As the auction clearance rate rises, enthusiasm will build, leading to broader price growth.

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