WHY SELL NOW ?
Now we ’ re firmly in election mode in the run up to 21 May , many people may be wondering if there ’ s any expected impact on the Australian property market if there ’ s a change in government . The short answer is it ’ s still too early to say as we ’ re still waiting on policy announcements . The main driver that has the potential to impact the market is the official cash rate moving up and we do know that the Reserve Bank of Australia ’ s ( RBA ) decade without a rate rise is coming to an end , possibly as early as June . When the board of the RBA left the cash rate at 0.1 per cent in April , it marked the 137th month without a rate rise .
The RBA governor ’ s statement left out one word – “ patient ” – in his notes after the April announcement not to increase the rate . The governor ’ s statement usually ends with a line saying ( as it did last month ): “ The Board is prepared to be patient as it monitors how the various factors affecting inflation in Australia evolve .” This month , however , the statement ended with “ The Board will assess this and other incoming information as it sets policy to support full employment in Australia and inflation outcomes consistent with the target .”
Although underlying inflation , at 2.6 per cent , is slightly above the middle of the RBA ’ s target range , the RBA remains uncertain as to whether core inflation will remain in the target range , given the potential for higher energy costs and supply side issues to be transitory .
The outlook for wages growth is another key area of uncertainty , with the RBA noting they still expect a pickup in wages growth to only be gradual . On the housing front , the RBA notes some housing markets have eased recently . All the major home value indices show this slowdown is evident across most of the capital cities and regional markets , although conditions are becoming increasingly diverse .
The good news for home owners is that variable mortgage rates are set to remain at their historically low settings for at least another month . On the other hand , fixed term mortgage rates are consistently rising , reflecting expectations for a higher future cost of debt . The rise in fixed term mortgage rates is just one of the factors contributing to a gradual slowdown in the rate of housing value growth . Other factors working to slow the housing market include affordability constraints , a lower rate of household saving , lower consumer sentiment and higher supply levels in some cities .
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