Historic low for cash rates could spark investment in market

'It should spark up the investment interest in the town while we're at absolute bottom'.

UNDERWAY: Carpenter Joel Hancock at work on a new house build in Spring Mountain. Picture: Rob Williams

A HITORIC low for cash rates could spark investment interest in the Ipswich housing market as new home sales around the country falter.

The number of new Australian homes starting construction in the June quarter increased by 1.1 per cent, the first jump since December 2017, according to data from the Australian Bureau of Statistics.

Despite a small improvement in new home starts in the June quarter, they remain 20 per cent lower than against the same period a year ago.

The increase in total starts was due to a 21 per cent lift in multi-unit starts but detached housing starts have slowed to their lowest level since December 2013.

Total housing starts in Queensland during the 2018/19 financial year fell by 13.9 per cent.

The Housing Industry Association's New Homes Sales Report showed new home builders were "feeling the winter chill" in August.

"The (report) showed that (new home) sales rebounded by 7.3 per cent in August, which partially made amends for the weak result in July," HIA senior economist Geordan Murry said.

"Despite the improvement in August sales, new home sales in the winter months were 4.6 per cent below the level recorded a year ago.

"Building approvals figures from the ABS reaffirm the findings from (the report)... the new home market is yet to see a pick-up in activity despite improved conditions in the established home market.

"The tail end of the housing downturn continues to unfold.

"Throughout the remainder of 2019 the new home market should start to reflect the lower interest rate environment following the RBA's cuts to the official cash rate. The modest lift in home prices over recent months has led to improved confidence and is likely to result in increased activity amongst investors.

"These factors together should assist the housing market in the back end of 2019."

In seasonally adjusted terms, building approvals in August 2019 dropped 21.4 per cent in Queensland.

Ray White Ipswich principal Warren Ramsey said this could help the value of established properties in the city.

"The general market is probably a little bit soft at the moment due to the investment side of things slowing at the rate that it has," he said.

"Over time, there will be a shortage in established houses... we'll all get that benefit.

"Every property in Ipswich is now a positively geared opportunity (as a result of the latest cash rate cuts). If anything, it should spark up the investment interest in the town while we're at absolute bottom."

Mr Ramsey suggested to keep an eye on areas that encroached on prominent new estates, especially at Raceview, Flinders View and Brassall.

"Any of the sitting established houses that are now actually cheaper than replacements," he said.

It's business as usual for Ipswich builder Hancock Homes, which builds about a house a month.

Director Mark Hancock said things were "very steady" but expected it to gradually pick up.

"Nothing has sort of changed much for us," he said.

"At the end of the financial year, it sort of quietens down a little, certainly with the banks the way they are. With the interest rates dropping, I think there's a lot more activity around.

"We've seen a bit of a spike but nothing like it used to be. It's just been a gradual climb which is pretty good. I don't think we're in trouble. It's going forward that's for sure."

Mr Hancock said high growth areas in Springfield and Ripley were bright spots.

"Everyone wants to be in (Ipswich)," he said.

"It's got lots of schools, education, health, university and people can work here. They can live, work and play."

Originally published as Historic low for cash rates could spark investment in market