The recent announcement of the Reserve Bank of Australia’s rate cuts are set to influence Melbourne’s real estate market in several ways.
Lower interest rates reduce borrowing costs, enabling buyers to secure larger loans. This often leads to heightened demand for properties, which can drive up prices. In February, housing prices in Melbourne experienced significant growth, largely attributed to improved buyer confidence in the market, as well as increased borrowing capacity.
An improvement in borrowing power can also lead to higher market activity, and therefore increased competition amongst buyers, particularly in sought after suburbs that may previously have been out of reach. This in turn can push house prices up, benefitting those with higher budgets and stronger borrowing power.
While first home buyers often rejoice at rate cuts, they may still face affordability issues. Interest rate cuts can enhance borrowing capacity, but the flow on effect of a rise in property prices might offset these benefits, making it challenging for first time buyers to the market due to increased competition, making the search a little more difficult.
Rate cuts can also offer existing home owners improved refinancing conditions for those wanting to reduce their mortgage repayments. Rate cuts will often lead to mortgage holders shopping around for a better deal, and the banks offering attractive rates. If you’ve been thinking about refinancing to upsize, this is the perfect time to start exploring your options.
Property investors will find that the interest rate cuts make property purchases for portfolio investments more attractive. Rental costs priced to cover higher loans may be adjusted to suit a lower monthly repayment, making the market conditions to purchase of apartments, units, and townhouses, or large blocks of land for redevelopment ideal for long term investments.
Whether you’re ready to buy for the first time, upsize your home to something that suits your current and future lifestyle, or find the perfect investment opportunity to build a nest egg, now is a great time to buy in Melbourne. At Bayside Real Estate Advocates, we have access to versatile range of properties available, as well as some fantastic off market opportunities, so get in touch with us today and let us help you find your next home.
