Rate cut underpins property price rebound: PropTrack

Property prices rebounded to a fresh high in February, with the recent interest rate cut proving a boon for market conditions.

Auctioneer Mitch Dansey selling a home in Sydney’s Woollahra in January. Picture: Thomas Lisson

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Property prices rebounded to a fresh high in February, with the recent interest rate cut proving a boon for market conditions.

Buyer confidence returned to the market after buyers were buoyed by the prospect and eventual reality of mortgage relief through last month. PropTrack’s monthly Home Price Index for February revealed a 0.4 per cent lift nationally, ending the shallow downturn of recent months.

PropTrack senior economist Eleanor Creagh said the lift was underpinned by improved buyer demand, as seen through the most robust clearance rates in months.

“Market sentiment has ­improved now that interest rates have started to move lower,” she said.

“February’s rate cut boosted borrowing capacities while improved affordability and buyer confidence have driven renewed demand and price growth.”

Price increases were recorded across the combined capital cities (up 0.45 per cent) and regions (up 0.28 per cent) last month.

Both of the nation’s major capitals outpaced the midsized cities for the first time in years, with the biggest gain of the month in Melbourne (up 0.67 per cent), followed by Sydney (up 0.5 per cent).

Adelaide jumped 0.33 per cent higher, Brisbane rose 0.29 per cent and Perth held largely steady (up 0.02 per cent).

Each territory capital also lifted, with the ACT up 0.2 per cent and Darwin up 0.33 per cent. Tasmania was the only state to record falls last month, with Hobart down 0.03 per cent and the regions holding steady.

Ms Creagh warned that ­affordability challenges would dampen price growth typically seen during an interest rate easing cycle.

Canstar’s Sally Tindall. Picture: Tim Hunter.

PropTrack senior economist Eleanor Creagh

Mortgaged households benefited from the first rate cut in five years last month after the Reserve Bank used its first meeting of the year to reduce the cash rate by 0.25 per cent. The reduction was passed on in full by the big banks and kicked in on Friday, returning $103 per month to the pockets of the average mortgage holder. For those looking to buy, borrowing capacities were also boosted.

Data Insights manager of ­financial comparison site Canstar, Sally Tindall, said most households would not see their mortgage repayments drop for at least another four weeks despite already being charged less interest. “A small weight has been lifted off the shoulders of millions of variable rate borrowers,” Ms Tindall said.

Banks are already beginning to lower their variable rates. Fourteen banks currently offer at least one product with a mortgage rate below 5.75 per cent, with the lowest offer in the market 5.59 per cent.

‘’This could inch down even further over the next few weeks as lenders size each other’s offerings up,” Ms Tindall said.