Inside Property
The early bird gets the worm
This
week some more optimistic reports regarding interest rates started to filter
into the media. We are seeing enough evidence to give credence to the idea that
the reserve bank may consider easing back official interest rates by the end of
the year. (Some odds are sitting on around 75% for a rate cut by
Christmas).Whilst the banks have moved independently of the official rate, the
feeling is the worst of the sub prime fallout may be behind us. Many are
expressing their concerns that the banks’ independent rate rises combined with
the official rate hikes, petrol and grocery prices have actually tipped our
economy too far. The latest retail stats are a thermometer of sorts for the
merits of the rate rises – the retail sector appears to have come to a grinding
halt, as opposed to a theoretical ‘slowdown’.So
the hint of a rate drop is extremely good news for those homeowners who have
felt every upward creep of the percentage points with increasing trepidation.
It is also good news for the property sector as the confidence is showing hints
of returning already. Many buyers have given us the feedback that they will
‘wait and see’. From my viewpoint as an agent in this area I want to reiterate
my suggestion that now is a fantastic time to buy. When the rates ease back the
buyers will re enter the market in larger numbers, creating more competition
for stock and less negotiating leverage. Much of the current market conditions
are based on emotions which are not connected to the actual statistics – the
key ingredient for a successful economy is confidence. We have a well rounded
collection of homes for sale on our books in every price bracket, with
extremely realistic sellers. We have seen movement in prices nearing 10% in
some situations. When the rates tip back the rental yields look healthier as
well – often there is a window of opportunity before the demand fuels the
prices and the yields are lost. The next few years will see the strong
likelihood of increasing rental returns sweeten the rewards for patient
investors. The early bird gets the worm! The lower end of the market continues
to perform well for first home buyers and entry level investors. The top end of
the market is also gaining momentum.
Till
next week,
Olivier
Miller