Australia is enjoying a return to high consumer confidence after the Reserve Bank cut the official interest rate from 1.5% to a new record low of 1.25% at its June meeting. This cut marks the first change to the interest rate since August 2016, and has been welcome news to home buyers and property investors. As recent Crown Group sales figures show, this and several other factors are injecting new confidence in Australia’s residential property market.
Optimal conditions for buying investment property
Lending conditions are expected to become far more competitive following June’s interest rate decision, with the big four banks all promising rate cuts for their customers at some point. These conditions may soon become even more favourable; economists believe there are one or two more interest rate cuts ahead this year, possibly as early as next month.
The interest rate change follows closely on the heels of the recent Federal election, which has seen the Liberal party remain in power for another term – along with their support for investor-friendly negative gearing. This result has also coincided with the Australian Prudential Regulation Authority (APRA)’s recent decision to relax lending restrictions for home buyers. Together, these conditions are providing plenty of incentive to invest.
Surging sales of premium apartments in Sydney, Brisbane and Melbourne
Crown Group Chairman and Group CEO Iwan Sunito said he had seen a surge in both confidence and buyer activity in the past two weeks as a result of the election outcome. Mr Sunito said that Crown Group had enjoyed a buoyant start to the year, with sales increasing exponentially since January by up to 60% each month. “From January, sales had doubled in a month, then tripled from February to March, then rose another 25% to 11 sales in April.
“Our sales team has been dealing with a huge surge in enquiries as a result of the Federal election outcome and the APRA decision in the past two weeks,” he said. “However, this has been the continuation of a trend that started in the new year as investors in Australia and overseas started returning to the market and looking for new opportunities to buy.
“We are expecting to close another $20 million in sales this week and in the second half of the year, we expect to be very buoyant, with sales at Mastery by Crown Group and Eastlakes Live by Crown Group increasing month on month. Property hunters are out there and they are ready to spend money, they are just choosing the right timing – and the timing now is better than ever.”
Mr Sunito said his sales teams were still seeing enormous demand from our buyers for the six developments Crown Group has underway or in its pipeline in Sydney, Melbourne and Brisbane.
“We expect to see a surge in buyers making offers in June, July and August, and a huge turnout at our launch in Brisbane’s West End later this year, now that market confidence has returned,” he said.
“This is because fundamentals in the Australian economy are still sound – economic growth is solid, interest rates and inflation are low, unemployment is still low – and as a result any measures that allow finance to be secured more quickly and easily will instil a broader sense of confidence among buyers.”
Strong leasing enquiries for luxury apartments in Sydney
The good news has also extended to the leasing side of the company, Crown Property Agency. Crown Group Director of Property Management Anthony Caudullo said the dedicated and experienced leasing team at Crown Property Agency had been inundated with enquiries from its 20,000-strong renter database since it released the first 100 new luxury apartments at Sydney’s Green Square earlier last month.
“At Infinity by Crown Group we have had 800 inquiries for rentals since we released the first 100 new apartments for lease on 4 May, with 582 people turning up that day to our first open day in Green Square,” Mr Caudullo said. “Forty apartments had been successfully leased out by our CPA team and we expect all 100 apartments to be leased out within weeks – which is very unusual.”
Whether customers are looking to rent or buy an apartment in Sydney, Melbourne or Brisbane, it appears that consumer confidence is certainly on the rise.