the current supply and demand issues we are experiencing. A lot of people have been asking how the State Election will, if at all, impact property prices. The outcome may not have too much of a direct effect as interest rates are the key driver in the current market. However, Stamp Duty is more of an issue in a state election and the only potential impact we perceive is that the Labor Government said clearly that “if elected, they would abolish the newly implemented First Home Buyer Choice initiative”, which is yet to be seen. The current initiative has given first home buyers, on homes valued up to $1,500,000, the option whether to pay upfront stamp duty or an annual property tax to assist eligible buyers into the market. While this will only impact a small portion of homes in our area, buyers coming into our area are often selling a property to afford to be in this beautiful part of the world, their buyers will be impacted if this changes with no suitable replacement. Interest Rates (RBA): As at 28 March, the ASX 30 Day Interbank Cash Rate Futures April 2023 contract was trading at 96.41, indicating a 5% expectation of an interest rate decrease to 3.35% at the next RBA board meeting. As per predictions, the cash rate was left at 3.60% giving us the first unchanged rate in over 10 announcements. This unchanged figure will leave most mortgage rates around 5% and up to 8% for fixed rates. This may seem like a good indication for now but the fear is that the market will become extremely reactive to interest rate news meaning that around a rate announcement the market will pause. Further, if a rate rise occurs next month or the month after the market will respond negatively and if unchanged or decrease, positively. This is not good news because a reactive market remains unstable, and this has been the issue for the past 12 months. Finance There is increasing chatter about the ‘mortgage cliff’. Will increased interest rates and mortgages becoming ‘unfixed’ in 2023 impact the market further? There is an expectation that by September up to 80% of mortgages will become unfixed. The good news is that banks like Westpac have said they believe that the RBA will increase the cash rate to 4.10% before providing some relief in 2024 down to 3.85% and holding. Thomas Merriman | 0401 840 859 | thomas.merriman@raywhite.com
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