The latest housing data released last week contains evidence that investors are the driving force behind the increase in residential housing prices in most Australian capital cities. The Australian Bureau of Statistics released its latest preliminary price index for established houses in August, showing the weighted average housing price for the eight capitals rose 2.4 per cent in the June quarter.
The biggest factor is the Reserve Bank of Australia’s series of cuts to the official interest rate during the past 18 months. The RBA’s official cash rate is 2.5 per cent, representing a cumulative 200-basis point reduction in rates since the start of last year.
Buyers are returning in droves: owner-occupiers and particularly investors, including an increasing number operating self-managed super funds keen to diversify into direct property.
Some analysts are calling for Australian authorities to follow New Zealand’s lead and impose strict limits on low-deposit home loans to take some heat out of our rising home prices.
The Reserve Bank of New Zealand has moved to pre-emptively spike a developing housing bubble in Auckland and Christchurch. However rather than use the conventional method of raising interest rates, it is instead putting limits on the amount of low-deposit loans banks can make. While this method may appear a drastic action, it may be the solution to our decreasing housing affordability locally.
“Historically low mortgage rates are now also playing a role in the housing market,” she said.