‘If we’re not at the bottom, we’re very close’
The housing market slump that has so far pushed Sydney prices down 14.9 per cent from their mid-2017 peak, and Melbourne prices down 11.1 per cent from their highest point, has hit the pipeline for new home-building hard.
Official figures last week showed approvals of detached dwellings, which had largely held up while apartment approvals sank, fell in April to their lowest number since 2013.
“FY20 will be the first year in four to five years where we under build, where we have an under supply of new housing against demand,” said Mr Steinert, who predicted an imminent end to the east coast-dominated housing price declines.
“If we’re not at the bottom, we’re very close to it,” he said.
Other commentators were more cautious, saying the 25-basis-point cut would bring much-needed stimulus to the languishing market of residential investors, but that any boost would take time to work its way through.
“It’s been slow for so long it will take a while to gear back up,” said Susan Mitchell, the chief executive of listed mortgage broker Mortgage Choice, who said prices were only likely to start rising in the first half of next year.
“People will need to put their house on the market and sell. It should slow down the fall in property prices.”
Domestic factors such as the rising unemployment rate – which picked up to 5.2 per cent in April – and global trade tensions remain factors that many in the property industry also cite as concerns.
“Undoubtedly, business conditions have been difficult in Australia, and this easing should assist small-to-medium enterprises as well as the residential markets,” said Darren Steinberg, the chief executive of Dexus, the country’s largest office landlord.
“However, international issues – such as an escalation of a trade war – are of greater concern for Australia’s economic growth.”
Tim Johansen, non-bank lender Qualitas’ managing director for capital and debt, said it would be important for banks to pass on the full extent of the cut, which CBA and NAB said they would do and ANZ said it would not.
“They should pass it straight on,” Mr Johansen said. “It’s a shot in the arm.”
Mr Steinert declined to say whether banks should pass on the full cut or not, calling it “complicated”.
“The fact that the cost of money has reduced to some degree will help stimulate the broader economy, both in housing but also in small business,” he said.