Last week’s decision by the Australian Reserve Bank to trim interest rates by 25 basis points will provide some incentives for first homebuyers and investors in regional Australia, according to real estate group Raine & Horne.
“It’s great news that many of the banks have taken the decision to pass on the cut in full, and more in some cases. I’d urge those lenders still sitting on the fence to follow suit and pass on the rate cut pronto,” said Angus Raine, Executive Chairman and Chief Executive Officer of Raine & Horne.
Raine added that the rate cut is excellent news for regional real estate markets across the country.
“The rate cut will maintain the rage in our capital cities, and this will wash through to regional markets with robust economic fundamentals.”
The interest rate cut is expected to attract investor interest to Wellington, a regional town in New South Wales that benefits from its close proximity to major regional hubs, Dubbo, Mudgee, Parkes and Orange.
“This interest rate cut will be great for investors seeking decent yields, while it’ll be a boost for local first home buyers,” said Gary Francis, Sales Manager, Raine & Horne Wellington.
“New South Wales first home buyers have been stripped of many of their benefits in recent years, so this rate cut will encourage some to jump off the rental treadmill and into their own homes.”
Wellington’s affordability is another inducement for first homebuyers.
“It’s possible to pay under AUD$250,000 for a quality four bedroom house on decent size blocks in our town,” said Mr Francis, who recently listed 1 Riverview Avenue, Wellington for sale for AUD$239,000.
In regional Queensland, towns such as Toowoomba will boom as a consequence of the cut to official interest rates, and the news that many of the major banks have trimmed their variable rate home loans.
“It’s a really good move for our market, which was on the cusp of a surge anyway, thanks to a massive recent infrastructure injection in Toowoomba. The move by the RBA will simply turbocharge values,” said Andrew Lynch, Principal of Raine & Horne Toowoomba.
Lynch believes the spike in Toowoomba real estate will be led by investors.
“It’s possible to get a home loan rate of 4.23 percent now, and with yields of between 5 and 6 percent, an investment in a well-located, quality property in Toowoomba starts to make plenty of sense.”
Earlier this week, Raine & Horne Toowoomba listed three blocks of land in the Graceview Estate for between AUD$195,000 and AUD$210,000.
“The blocks are between 600 and 610 square metres in size, and they sold to out-of-town investors within 24-hours,” said Lynch.
“Interest from out-of-town investors is 30 percent stronger this week and I’d attribute this to the RBA decision and the fact that the Queensland election is over.”
In the South Australian regional town of Murray Bridge, the decision to cut rates will boost local real estate activity and values.
“This cut will be special as values have been a bit flat in Murray Bridge, even though prices have been improving in Adelaide,” said John De Michele, Principal of Raine & Horne Murray Bridge.
“We expect that investors will start to look at regional towns such as Murray Bridge where the median price is about AUD$250,000 and rental yields above 5 percent are achievable.
“Investors are realising they’re paying more in the city and will now go bush to get the benefit of this cut.”
Murray Bridge’s diverse economy, which includes irrigated horticulture and dairying, tourism, dry-land farming and intensive animal production, also underpins its vibrant property market.
“The good news for Murray Bridge keeps rolling, with Thomas Foods, a local meat processing firm, recently announcing 200 new jobs as the plant goes 24×7,” said De Michele.
“This will attract more transient contract workers who will need rental accommodation, which savvy investors will be sure to note.”
Andrew Batt, International Group Editor of PropertyGuru Group, wrote this story. To contact him about this or other stories email andrew@propertyguru.com.sg
