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Homebuyer and seller activity slumbers away after historic rate cut

Growth in property prices remained subdued last week as buyers and sellers waited anxiously for banks to pass on the Reserve Bank’s latest interest rate cut.

Core Logic RP Data figures showed prices increased by an average of just 0.2 per cent across the nation’s five biggest capitals, increasing 0.4 per cent in Sydney and 0.1 per cent in Melbourne. Core Logic housing market specialist Robert Larocca said the impact of the Reserve Bank’s decision to cut the rate to a historic low wasn’t clear yet. “The positive impact of the rate cut will take a few weeks to be apparent on a national scale because volumes are still low,” he said. “If the rate cut is to encourage a few more active buyers and sellers it will also take a few weeks to be obvious.”

The decision by the Reserve Bank to cut the cash rate by 25 basis points has resulted in arguably the country’s lowest mortgage costs since the 1960s. Core Logic head of research Tim Lawless added that “lower mortgage rates have the potential to add some fuel to what are already strong housing market conditions.”

Until buyers and sellers respond to the changed mortgage environment, real estate activity looks set to remain dormant.

Source: Daily Telegraph, 9th Feb 2015 

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