Despite interest cuts, Australian housing prices have hit a record high for the second month in a row. Prices were up 0.27 percent in March. This increase in prices has come just after the Reserve Bank of Australia cut rates.
According to Eleanor Creagh, senior economic for REA group, “February’s rate cut boosted borrowing capacities and buyer confidence, helping to reignite demand and reverse the small price declines seen in the months prior.”
Capital Cities Lead the Way
The capital cities of Sydney and Canberra led the way in the market rebound, with Sydney’s prices going up to 0.47 percent and Canberra up to 0.54 percent. Brisbane, Adelaide and Darwin prices hit new peaks in March as well. Australian housing prices went up in all capital cities. However, the increase was less substantial in Brisbane, Adelaide and Perth.
RBA Introduces Rate Cuts
In February, the RBA cut the cash rate by 25 percent, reducing it down to 4.10 percent. This was the first slash cut rates in over four years.
However, some experts are calling the cuts rather mild. According to Tim Lawless, research director for CoreLogic, these cuts are unlikely to directly improve serviceability or borrowing capacity. Australian Housing prices are still high. Nevertheless, the market has responded somewhat positively. Ying Chan, A Melbourne-based buyers advocate, has noticed more first-time homebuyers in the market.
Fight With Inflation Not Over Yet
Michele Bullock, governor of the RBA warned that the fight against inflation isn’t over yet.
Additionally, with a moderate population growth, Australians still face a significant challenge in terms of the housing shortage. Ms Creagh said property prices are still a major constraint for buyers.
Australian Housing Prices have risen nearly 48% over the last five years, according to PropTrack. The rates of homeownership among young Aussies has fallen drastically over the past 25 years due to typical home prices increasing to more than eight times the median income.
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