The Reserve Bank Board has lowered the cash rate by 25 basis points to 4.25 per cent, the second cut in a row. ANZ was the first of the big four to cut its standard variable mortgage rate by 25 basis points, passing on the Reserve Bank's cut in full. The banks have been facing increasing political pressure to cut rates in the lead-up to Christmas to help stimulate the economy.
Is real estate riskier than investing in shares? Apparently so, according to a report by the Australian Financial Review. The paper quotes Michael Sherris, a professor of actuarial studies at UNSW's Australian School of Business. Mr Sherris says that those heading towards retirement may not have as much equity in their properties as they had been expecting. He points to the credit crisis that saw residential property prices plummet overseas, warning that many Australians may be more exposed than they are anticipating.
And perhaps some homeowners are already feeling a little nervy, the number of residential properties for sale in November increased by 1.5 per cent compared with October, a 17 per cent increase when compared with November last year. That's according to SQM Research. Canberra recorded the largest monthly increase in stock, rising by 5.8% during the month. November is usually the peak spring selling month, so it's likely stock levels for the year have peaked Australia-wide. The SQM managing director says the market is now generally considered to be oversupplied with listings. There's enough stock on the market to continue to put downward pressure on house prices.
And dwelling investment made no contribution to economic growth for the September quarter and is down by 2.9 per cent over the year. Money spent on renovations was flat for the quarter, but up 1.3 per cent for the year. The National Accounts figures highlight that growth is due to the continuing ‘catch up' in Queensland after the floods and the mining boom in Western Australia. The Housing Industry Association is calling on the government to stimulate sectors such as new home building to ensure it's not just the mining state of Western Australia that continues to grow.
