Summer is well and truly upon us, with a very sneaky weather change from cool Cairns winter to scorching days almost overnight.
Offering a similar heat is the property market as it transitions into the last quarter of 2021, with home sales continuing apace as stock remains tight and buyers continue on the hunt.
With the Reserve Bank holding steady at a cash rate of 0.1% we are unlikely to see change on that front for some time, though APRA (the Australian Prudential Regulation Authority) has announced tougher lending criteria which will be expected to flow through to banks shortly. A relatively small change, from 1st November the buffer applied for mortgage stress tests by a bank will rise from 2.5% to 3% on new loans. Put simply, even though you are borrowing at 2% (for example), your bank factors in a potential interest rise to make sure you can still cope down the track, in this case they will now test you at 5%. For the moment, your repayments won’t be affected, though your total borrowing power might ease back a little.
This change is designed to limit those that might be overextending in their borrowing and is most likely to affect those borrowing to their maximum capacity – particularly in capital city markets which continue to break records (and make headlines) each month, despite lockdowns.
While there are concerns elsewhere of an overheating market, Cairns prices are still playing catch up for the most part, making up for years of little to no growth post-GFC. With rental yields still high and replacement cost still higher than sale prices in many cases, there is an argument that the market has legs yet, as long as interest rates (and lending policies) remain steady. There are great opportunities for sellers in a variety of price ranges, and an updated appraisal is a must if you are thinking of making a move.
Rounding things out on a slightly different tack, I, (as well as many members of the local real estate industry no doubt) would like to congratulate Angela Capitanio of Ray White on her recent retirement after over 30 years in the industry. As someone that had led a storied career long before my entry and whom I had the privilege to work with on rare occasions, Angela leaves behind a stellar reputation as she moves to new endeavours. All the best!