What do you get if you combine an interest rate cut – and the possibility for several more – with a crisis-level housing shortage?
Common sense would suggest the answer is obvious: a big spike in property prices.
On top of low supply, that seems like the perfect storm for another price boom. So why aren’t double-digit increases on the cards once again?
Owen says soft economic outlooks, global uncertainty and normalising migration levels will all help keep a lid on prices.
And ultimately, after years – and, indeed, decades – of surging costs, there’s only so much Australians can afford to spend on housing.
“At the end of the day, you can only really have this ever-increasing demand if people can afford to get into the market,” Owen says.
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But while they’re expected to rise following the Reserve Bank’s decision to reduce the cash rate to 3.85 per cent on Tuesday, a repeat of the stratospheric surges from a few years ago seems unlikely.
“It’s a mix of headwinds and tailwinds, and obviously it’s difficult to know where all of those factors are going to land… but we would expect off the back of this mix of factors that home values would continue to rise.”
