This afternoon the RBA delivered its third interest rate cut in four months to take benchmark interest rates to just 0.75% in a collective move that has already sent house prices higher nationally.
Over the quarter to September 30 2019 property data provider CoreLogic is reporting that Sydney and Melbourne house prices increased 3.5% and 3.4% respectively.
Over the month of September they both appreciated 1.7% which on an annualised basis would see property prices in the nation’s two major markets back at record highs this time next year.
CoreLogic also reported that Canberra, Hobart, and Brisbane prices all climbed over the September quarter, with Adelaide, Perth and Darwin marginally lower.
Recent ABS stats showing credit growth to home loan borrowers expanding quickly year-on year also lines up with the data around rising house prices.
While the banking regulator APRA has also moved to loosen lending restrictions placed on banks given the ultra-low benchmark rate environment.
As such all the fundamentals and data point to strengthening housing markets over the short term which is good for residential property focused type businesses such as REA Group Limited (ASX: REA), Domain Holdings Australia Ltd (ASX: DHG) and Mortgage Choice Limited (ASX: MOC).
Home owners are also big winners from the rate cuts with the RBA hoping the extra cash in back pockets will flow through to the wider economy and struggling retailers.
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The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.