The real estate sector, housing industry and property investors alike have anticipated a drop in the cash rate as the economy adjusts to increased prices in products and services impacting the property industry as a whole and moderate growth in revenues.
Townsville’s economy has a broad base of industry and government; defense, mining, engineering and agriculture which has supported modest growth in rental accommodation prices driven by increased holding costs and the injection of the 3rd army battalion to the City early in 2012. Vacancy rates that were published by Herron Todd White in October 2012 have shown an increase in vacancy rates to over 2 percent.
Rapid Realty’s monitoring of prices and volumes suggests that housing prices have been steady across North Queensland with volatile fluctuations from street to street. Similar or slightly lower transaction volumes have occurred in 2012 compared to 2011.
The combination of higher vacancy rates in the rental market, which may reach 3 percent by 2013, together with very affordable house prices that many commentators are saying is bottoming, means that we may have arrived at the most favourable buying conditions for investors in the current property market cycle.
Positive economic news out of Asia and the recovery of USA housing prices and volumes could stimulate more positive news from global markets, and stem the tide of negativity that has dogged markets in our region since the start of the Global Financial Crisis (GFC).
State budget corrections and the emerging "policy cliff in Canberra" where the federal government is seemingly persisting with a budget surplus is further risk to the confidence factor in property markets.
North Queensland is not insulated from these macro-economic factors by all means, but the local economy has demonstrated positive resilience in the past.
The RBA decision today to reduce the cash rate is further incentive for buyers and investors to enter or expand their exposure to the property market in North Queensland.
Trusting the banks to pass on the full .25 percentage point reduction is an uncertain instrument in the current global financial economy for which the RBA or government policy must acknowledge and treat to assist in the recovery of the property markets in the North Queensland.
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