Investors and first homebuyers look set to re-enter the property market in droves, following the surprise 1% rate cut by the Reserve Bank of Australia (RBA), according to experts.
Stephen Sharry, CEO for Raine & Horne Queensland, said the deeper-than-expected rate cut will lift the average buying power by up to 10% and will encourage buyers who have been priced out of the market to return.
With the banks passing on up to 0.80% of the rate cut, borrowers are able to save at least $200 each month for an average home loan of $300,000 taken over 30 years.
Sharry said real estate agents have already noticed the knock-on effect from the 1% rate cut.
"There has been an increase in pre-approval requests for financing and we expect there will be a slight increase in sale volumes in certain sectors," he said.
Paul Newell from Raine & Horne Financial Services Queensland said property was increasingly looking like a sure bet amidst the ongoing rout in share markets across the world.
"Lower interest cost means increased yields to property investors," Newell said. "Combine this with the uncertainty of the world stock markets and it makes property look like a much better long-term investment."
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