John McGrath's Blog

Friday, 30th December 2011

Founder of McGrath Estate Agents, John McGrath

We've noticed a marked improvement in buyer enthusiasm following he first interest rate cut but it won't be enough on its own to spark some serious growth. People are looking for more great news to regain their confidence to buy and sell.

Interest rates are definitely an important factor in people's purchasing considerations, particularly in the sub $1.5 million market, but it's not the only one.  There are other macro issues that are probably a greater influence on people's psyche.  The European problems are a big dark cloud and if they're resolved I think that will have a much greater positive impact on the actions of buyers than a quarter percent rate cut.

While we continue to wait for more positive signals, green shoots of growth and new demand continue to emerge.  The market under $1 million is strong due to first home buyer and investor activity and while there have been a few good sales at the top end, the prestige sector still lags.  We need to see unemployment down, retail spending up, a resolution in Europe, improved bonuses and a good consistent quarter on the stock market for the prestige sector to move.  I think we'll see people getting back on the horse in 2012, as opportunities above $3 million are exceptional.

Australian buyers don't need to see a lot of price growth to regain confidence, they just want to know that home values have stabilised.  A lot of people are sitting there with cash in the bank waiting for the signal that the market has leveled and now's the time to buy.  The underlying demand is there, people are just waiting for the bell to ring and I think there's a good chance that will happen in the first half of 2012.

For more on John's market observations go to www.JohnMcGrathBlog.com.au/blog/2/78

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