As the Queensland property market continues to show signs of an upwards swing, with consumer confidence also trending higher, today’s cash rate cut may undermine the state’s strong market condition, according to Queensland’s peak real estate body, the REIQ.
“Recent consumer confidence reports show a renewed sense of optimism amongst property buyers, and this is particularly evident in Queensland,” said REIQ CEO Antonia Mercorella.
While the REIQ welcomes decisions that make it easier for Queenslanders to service their mortgages or ease living affordability, its concern as interest rates head quickly towards zero, is that public confidence in the national economy will be shaken.
“Dropping interest rates to below 1 per cent may have a negative impact on consumer confidence in the economy, and we know that when people are experiencing uncertainty, they are less likely to make major financial decisions, such as buying or selling property,” said Ms Mercorella.
The REIQ’s quarterly analysis of the Queensland property market revealed the state’s house prices were proving strong, reflecting ongoing consistent growth, and highlighting its resilience when compared with other markets.
“Our data has been suggesting a future upwards swing within the Queensland property market for some time now,” said Ms Mercorella.
“Subtle changes in recent market activity are beginning to indicate that those forecasts may be coming to fruition.
“Whether or not an additional interest rate cut will have any material impact on the current state of the property market remains to be seen.”
The financial benefit of the interest rate cut to mortgage holders depends on whether banks pass those cuts on, which isn’t guaranteed, said Ms Mercorella.
“We know that banks don’t always pass on interest rate cuts to their customers,” she said.
“We also know that banks continue to place strict lending criteria for approving new home loans, which further restricts the number of buyers in the marketplace.”
September saw the Brisbane property market increase again (by 0.1 per cent) a further sign of its strong recovery from the recent housing downturn.
The Gold Coast and Sunshine Coast markets are also showing signs of continued growth, increasing by 1 per cent and 0.9 per cent respectively, over the same period.
REIQ Media and Communications Manager
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