Please see below the update from Ray White's CEO of Growth, Mark McLeod
As always, buyer sentiment is heavily influenced by the dual factors of local market conditions and the overall macro-economic environment. Global woes continued to dominate the media last week, as fears mount that Greece will leave the Eurozone and default on its debt.
An article in the Sydney Morning Herald said the Commonwealth Bank has been preparing for a possible Greek exit from the Eurozone for some time. Chief Executive Ian Narey said the current volatility and strains on global money markets will be felt throughout the Australian economy, hurting confidence and pushing up bank funding costs. AAP reported that global equity markets plummeted during the week as the Australian dollar fell below parity, marking the first time the dollar has been below 100 US cents since December 2011.
Domestically, a Property Observer article said minutes released last week from the May 1 Reserve Bank (RBA) board meeting show that weak housing, construction and mortgage industries were the factors behind the recent decision to cut the official cash rate by .50%. According to the article, the minutes also show that the latest data indicates housing prices have continued to decline, albeit with tentative signs that the rate of decline may be slowing. Further, a Herald Sun article interpreted the RBA’s minutes as saying the board slashed the official cash rate partly as a response to the higher home loan interest rates being charged by the commercial banks, as well as being influenced by “fragile” conditions in international economies.
Meanwhile a Sydney Morning Herald article quoted APM’s Dr Andrew Wilson as saying prices in Sydney’s prestige market are back to 2007 levels, with the wider Sydney market still below where it was a year ago. The article suggests the current over-supply issue has been worsened by a demographic “blimp” of baby-boomers wanting to downsize.
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