The Reserve Bank of Australia's (RBA) decision to cut the official cash rate may not only have improved the affordability of home loans, but also properties themselves. The Real Estate Institute of Australia (REIA) revealed that real estate became more affordable during the first quarter of the year – and it's likely to have been boosted further by falling interest rates.
Figures from the Adelaide Bank/REIA Housing Affordability Report shows that around 30.8 per cent of the median family income is currently needed to meet average loan repayments. This has fallen 0.7 percentage points, which analysts believe is a direct reaction to declining interest rates.
Buyers might be encouraged to purchase property in Cook, as president of the REIA Neville Sanders revealed that the Australian Capital Territory had the smallest proportion of income needed to meet loan repayments. New South Wales, on the other hand, was once again named the country's most unaffordable state or territory.
Australia's official cash rate has remained at two per cent since 6 May, after the RBA acknowledged that economic conditions weren't quite as strong as they should be. Minutes from the latest meeting on 2 June show that the board was keen to see whether the state of the economy would remain consistent in light of the previous month's cash rate reduction.
There was some room for optimism as the RBA revealed that conditions in the housing market had remained relatively strong. Construction activity is particularly buoyant at the moment, although there are some concerns that house price inflation may price buyers out of some capital city markets.
However, with Canberra and other parts of the ACT often seen as some of the more affordable areas of the country, this might lead to increased demand for property. If you're interested in buying or renting in the near future, be sure to speak to the team at Ray White Belconnen.