Lower rates unlikely to affect housing market

Lower mortgage rates are unlikely to increase the level of activity in the property market, RP Data’s Cameron Kusher has claimed.

While a majority of economists believe the Reserve Bank will cut the official cash rate once more when the board meets next Tuesday, after a weaker than expected headline inflation result, Mr Kusher believes any such action will still not deliver an uplift in property purchases.

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“Lower interest rates and the subsequent lower mortgage rates are undoubtedly providing an impetus for greater housing market activity,” he said.

“The key challenge will be maintaining this higher level of housing activity as the unemployment rate nudges higher, commodity prices head lower and with slower economic growth.

“As a result, the markets more closely linked to the resources sector, such as Perth and Darwin, may record lower levels of value and rental growth, whereas those such as Brisbane and Adelaide that have recorded a sustained period of underperformance, may start to pick up as they start to look relatively more affordable, particularly compared to Sydney, Melbourne and Perth where value growth is currently much stronger.”