Tuesday’s interest rate cut has sparked plenty of optimism among homeowners but for some South Aussies, the announcement could prove a double-edged sword.
The Reserve Bank of Australia’s decision to lower the cash rate by 25 basis points, down to 4.1 per cent, is set to add further strain to South Australia’s already tight property market, where a lack of housing supply has been pushing prices up for years.
Property data shows new sales listings have decreased by 12 per cent in Adelaide and 11.3 per cent in regional SA compared to this time last year – making it the largest declines across Australia.
Property prices, meanwhile, sit at an all time high, with the average house across greater Adelaide now selling for $806,000 and units for $550,0000, according to PropTrack.
Peter Theodorou of Mindset Property said recent rate cuts would likely drive an increase in buyer competition and, subsequently, home prices as listing numbers remained low.
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More money in the bank as a result of RBA cuts is good news, right? Apparently not if you’re a first homebuyer looking to compete for a property at a time when listings are slim.
“We’re still seeing demand far outstrip supply, and with this rate cut, competition is only going to intensify,” he said.
“Properties are already selling quickly, and this will make the process even more challenging for buyers who aren’t prepared.”
Ashley Williams of Selling SA Homes said while limited properties put sellers in a strong position, unrealistic price expectations may still pose a challenge.
“Sellers may see this as a golden opportunity, but affordability is still a concern,” she said. “Buyers might have more borrowing power, but cost-of-living pressures mean they’re still being cautious with their budgets.”
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Ami Reynolds of Broker That says recent RBA interest rate cuts could have negative effects on both homebuyers and renters.
Ami Reynolds of Broker That said rate cuts could also spell bad news for tenants.
“As homeownership becomes more difficult, more people may be forced to continue renting – driving up demand and rental prices even further,” she said.
“For investors, lower rates and rising rents may seem like a win, but yields aren’t always keeping up with property price growth.
“It’s important to crunch the numbers and ensure the investment stacks up long-term. Buyers also face intense competition and need to position themselves as strong contenders by securing pre-approval for their finance.”
