With the overall national property market moderating, this gives the capacity for The Reserve Bank to cut interests even further during 2015 without any major concern that this will fuel a property boom.
The latest national real estate house price growth figures show that falling interest rates is not leading to a housing bubble. During February 2015, The Reserve Bank cut interest rates by 0.25% - the first cut in 18 months with more cuts expected during the remainder of 2015.
However, figures produced by CoreLogic RP Data show that the February cut in interest rates did not have a major impact on the Australia property market. In fact, their latest figures for March 2015 show that the overall national market is stabilising apart from Sydney which is still in an expansionary phase.
Overall, home values across the combined capital cities increased by 1.4 per cent in March 2015 according to the CoreLogic RP Data Home Value Index, driven by an exceptionally strong Sydney result where dwelling values were 3.0 per cent higher over the month.
However, the annual price rate of growth has moderated back to 7.4 per cent, which is the slowest annual growth rate since September 2013. It is also important to note, that combined capital city home values have increased by 3.0 per cent over the first quarter of 2015 which is lower than the 3.5 per cent increase in home values over the first quarter of 2014.
The latest lending figures released by the Reserve Bank also confirm that lower interest rates are not leading to a property boom through Australia.
The central bank has just reported that the value of credit provided to buy-to-let and buy-to-sell investors expanded by 0.7 per cent month-on-month in February, compared with growth of 0.8 to 0.9 per cent for the previous 10 months. For the 12 months to the end of February 2015, however, accumulated growth was 10.1 per cent, unchanged from January and compared with 10 per cent at the end of 2014.
Another key point to consider about the national property market is that since home values began their current growth phase in June 2012, dwelling values across the combined capital cities have increased by 24.3 per cent but most of this growth has emanated from Sydney.
During this period Sydney dwelling values have increased by 38.8 per cent with Melbourne second strongest at 23.6 per cent. On the other hand, total dwelling value growth over the current cycle has been less than 10 per cent in Adelaide, Hobart and Canberra.
With the overall national property market moderating, this gives the capacity for The Reserve Bank to cut interests even further during 2015 without any major concern that this will fuel a property boom.