Sydney estate agent John McGrath has joined Aussie Home Loans boss John Symond by describing the RBA Melbourne Cup Day rate decision as “disappointing”, arguing the housing recovery has been limited to the more affordable end of the market.
“I think the RBA is over-estimating the depth of the market,” says McGrath, CEO of McGrath Estate Agents.
“The real recovery has been limited to the first-home buyer markets.
“Above $1 million there is no real depth.”
McGrath says a further two rate reductions in the short term would allow the market to gain some momentum “which in turn will provide activity and confidence in not only the housing market, but all associated sectors.
“I hope that they reduce rates pre-Christmas and again in early 2013 to give borrowers the incentive they need to transact,” he says.
In his spring 2012 market update, John McGrath says falling interest rates and prices have attracted first-home buyers into the market helped by the introduction of the new first-home owner grant.
“Rising rents have incentivised many tenants to shift into home ownership,” he says.
Looking ahead, McGrath says he believes that “real estate markets in most parts of Australia, certainly Sydney, are past the worst and heading for some blue skies in 2013”.
“That’s not to say I expect either a straight line growth recovery or an instant uplift in prices. Neither of these outcomes is likely.”
McGrath believes that a key catalyst for an upper-end housing market recovery will be the share market.
“Interest rates, rents and unemployment are not really influencing factors for the top end. Many luxury owners are still awaiting some clearer resolution on the macro economy and the euro zone before jumping back into the market,” he says.
Yesterday, Aussie Home Loans boss John Symond slammed the RBA's decision to hold the cash rate at 3.25% accusing the RBA of not being in sync with what is happening in the real economy and of making “pretty odd decisions”.