Lower interest rates, the 2016 Budget and a Federal Election – what does all that mean for property?  Michael Yardney gives us an insight and a warning as well.

Andrew Mirams from Intuitive Finance explains what LMI or Lenders Mortgage Insurance is all about.

As a follow on from last week’s show when Bernard Salt talked about how our living requirements have changed and the impact of that on our housing, Nerida Conisbee from realestate.com.au tells us about a study amongst 28,000 highly engaged listings on their site they used to come up with Australia’s ideal home. She also tells us why buyers are willing to pay $100,000 more if they find it.

We ask Pete Wargent to explain why Australian investors are the least willing to embrace new technology when searching for an investment.

The head of one of the country’s biggest real estate groups says we have it all wrong when we use auction clearance rates as a measure of how the market is either improving or declining.  He gives us some better indicators.

Jessica Darnborough gives us a look inside the Australian finance broking industry with some good advice about how to choose a broker.

 

Transcripts

 

Michael Yardney:

Kevin:  With more and more lower interest rates on the landscape, and of course, the recent budget, what does that mean for property? Michael Yardney from Metropole Property Strategists joins me.

Good morning, Michael.

Michael:  Good morning, Kevin.

Kevin:  Everyone’s talking about this, aren’t they? What’s going to happen with property? What’s your take on it all, Michael?

Michael:  As we know, recently interest rates have been lowered, and the expectation is that they’re going to be lowered once more, so interest rates may drop another quarter of a percent before the end of this year. Yes, everyone is wondering how is that going to affect property. I believe it’s going to put a floor under our slowing housing markets and it definitely will be welcomed by first-home buyers.

But I think the big factor in people’s minds at the moment is lower consumer confidence – some uncertainty about an upcoming election. A lot of people are a bit uncertain about their jobs. Interest rates have been lowered because the economy is not doing well. I think these other factors are going to make people just sit on the sidelines for a little bit, Kevin, and they probably won’t jump into property because of the lower interest rates, at least not just yet.

Kevin:  Michael, you mentioned there about more rate cuts on the horizon. When will that happen, and what impact are they having on the market?

Michael:  Many economists believe that there will be another round of rate cuts but not until after the election, so probably in August or September. The decision of the Reserve Bank really has taken a number of factors into account: the fact that our housing markets have slowed. APRA seems to be working well in that regard so it doesn’t have to worry too much about the housing markets.

It’s really more worried that our economy is slowing but inflation has almost stalled, which really means that our job growth, wages growth, and economic growth aren’t happening, so they’re trying to encourage it by, I guess, dropping rates more for businesses, who are hopefully then going to feel confident and employ people and buy new equipment. It’s working well in that side.

As for homebuyers, it’s going to allow people to pay off their mortgages a little bit quicker. I don’t think people in these more uncertain times are going to rush off and upgrade their homes or buy bigger houses; what they’re probably going to do is take advantage of the lower rates and get those financial buffers in place.

Kevin:  We are actually seeing the banks, too, passing on this recent decrease, aren’t we?

Michael:  It happened much quicker than in the past and to a greater degree, where most of the banks have passed on the full cut – at present, Kevin.