Interest rate cut gives a shot in the arm for Geelong home prices, PropTrack report shows

The first cut to interest rates in four years provided a shot of confidence in the arm for Geelong buyers, the latest PropTrack Home Price Index shows.

Geelong home prices rebounded in February as the first cut to interest rates in four years improved buyer sentiment in the property market.

PropTrack’s Home Price Index revealed the turnaround had pushed Geelong’s median dwelling price to $733,000 in February.

But PropTrack senior economist Eleanor Creagh warned not to expect price growth to return to pre-downturn levels as affordability pressures remain with a small number of rate cuts expected in this easing cycle.

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Geelong followed Melbourne in recorded a lift in median home prices in February as the Reserve Bank governor Michele Bullock followed through with the widely anticipated .25 per cent cut to interest rates.

Australia’s Reserve Bank Governor, Michele Bullock, speaks during the Monetary Policy Decision media conference in Sydney. Picture: David Gray

Geelong’s $733,000 median dwelling price remains 1.33 per cent below than what was recorded 3 months ago and 4 per cent lower year on year.

PropTrack recorded Geelong’s median house price at $764,000, while the median unit price hit $529,000.

Improving market sentiment now that interest rates had started to move lower was behind the lift in values, PropTrack senior economist Eleanor Creagh said.

“The February rate cut has improved sentiment, boosted borrowing capacities and buyer confidence, and we’d be expecting that will drive new demand and help drive growth in Geelong.

“So we’ve seen particularly strong growth in Melbourne and Sydney throughout February, whereas regional markets have recorded slightly smaller increases.”

The median house price reached $764,000 in Geelong, while the median unit price hit $529,000.

Ms Creagh said the prospect of rate cuts had already buoyed the market.

Auction clearance rates had improved in recent weeks, while the Westpac Consumer Sentiment Index also shows consumer house price expectations had increased ahead of the rate cut, she said.

“February’s rate cut boosted borrowing capacities while improved affordability and buyer confidence have driven renewed demand and price growth, reversing the falls of recent months,” Ms Creagh said.

Higher population growth and a shortage of new homes was also underpinning higher home prices, the limited number of interest rate cuts expect.

But interest rates cuts weren’t expected to return house price growth to the trajectory seen prior to the downturn in the market.

Prop Track senior economist Eleanor Creagh said while sentiment was rising, prices are not expected to gather much pace with only a few interest rate cuts predicted in this cycle.

“Looking ahead prices are expected to continue lifting and interest rates are expected to fall further,” Ms Creagh said.

“However, poor affordability will likely dampen the uplift in prices compared to prior easing cycles, resulting in the pace of home price growth trailing the strong performance of recent years.”

Buxton Highton agent Matt Hunt said there were more people looking at homes for sale and a growing number of listings.
“There’s certainly some confidence now that rates have come back. I think it is something that a lot of people have factored in for a while,” Mr Hunt said.

Buyers were more certain of their budgets, Jellis Craig Geelong director Jeff Begg said.

“First and second-home buyers are back out actively buying because they know that interest rates aren’t going to go up,” he said.

Originally published as Interest rate cut gives a shot in the arm for Geelong home prices, PropTrack report shows