Morning Briefing: RBA move set to spur Chinese buyers

There is a strong likelihood Australian real estate is set to become even more popular with Chinese buyers... Rate cuts unlikely to last, says broker head...

Morning Briefing: RBA move set to spur Chinese buyers
RBA move set to spur Chinese buyers
There is a strong likelihood Australian real estate is set to become even more popular with Chinese buyers following the decision this week by the Reserve Bank of Australia to cut the official cash interest rate.
 
Along with remedying low levels of inflation, the RBA’s decision on Tuesday was seen as an attempt to bring down the Australian dollar and if that happens interest in Australian real estate among Chinese buyers is set to increase from its already elevated levels.
 
“The rate cut is likely to drive the dollar down further, making property more appealing to offshore buyers,” Charles Pittar, chief executive officer of Juwai.com, an online portal that markets offshore real estate to Chinese buyers, said.
 
“In the first half [of 2016], Juwai.com sent 25% more Chinese buying enquiries to Australia, over the prior half [of 2016], so we see demand accelerating, even if capital controls make the process longer for buyers who don’t yet have funds overseas,” Pittar said.

Rate cuts unlikely to last, says broker head
While numerous lenders have announced rate cuts of some size following this week’s cash rate decision by the Reserve Bank of Australia (RBA), borrowers have been warned they may not last.
 
After the RBA cut the cash rate by 0.25% to 1.5% on Tuesday, lenders passed on varying proportions of the cut, but the head of a major mortgage broking network believes they are likely to move without direction from the central bank as the year goes on.
 
 “This might continue for a little while but I would expect many of them to reprice sometime this year as the current margins are unsustainable with the additional costs banks are facing along with the pressures of return on equity for their shareholders,” 1300HomeLoan managing director John Kolenda said.
 
Though this month’s move by the RBA did result in some rate cuts by lenders, Kolenda believes the market is moving to a position where the RBA’s monthly decisions are increasingly irrelevant.
 
“Consumers are far more sensitive and reactive when official interest rates go up and they have not necessarily responded when rates have been dropped by the RBA to stimulate the economy,” he said.
(Your Investment Property)

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