Don’t let the RBA’s decision overshadow your own

“Cash rates play an essential role as they determine our borrowing power and how much we can afford. Yet in some markets, cash rates play less of a role, due to the imbalance between demand and supply. If you see a house with your specifications available, you go for it,” Dr Mardiasmo noted in the introduction to the network’s latest market report.

Looking at how multiple layers shape local property markets, Dr Mardiasmo commented on how cash rate headlines are dominating attention, potentially clouding other factors that Australians should consider when looking to buy or considering selling.

“More than ever, how the economy is performing and its impact on the property market is widely discussed. I seem to be on stage almost weekly, providing an economic and property market update to a wider variety of audiences in all parts of Australia. It was even the topic of debate when we hosted a dinner at home with our friends,” she said.

Dr Mardiasmo acknowledged that the cash rate has a material impact on Australians’ lives, impacting not only their mortgage repayments but the larger state of the economy and therefore financial decisions, big and small. But she also noted that the complicated nature of property markets means that perhaps the cash rate – and its perception as somewhat easy to translate into dollars and cents – has played an outsized role in recent property considerations.

“There are a multitude of factors that impact demand and supply at a local level, and a divergent method of managing these factors,” she said.

“On the ground, market activity observations from Redland Bay (Queensland) are the opposite to that of Dapto (NSW). As I speak to people across Australia, I notice both similar and divergent trends and/or issues which point to one conclusion – the importance of understanding your local market,” Dr Mardiasmo said.

Added to that, she noted that individual household and financial readiness add another layer of complexity to the decision-making.

At PRD, they advise that property owners and buyers should look at these six layers to forecast if their next property move is the right one:

• Housing strategies in the local area
• Your own financial readiness
• Government policy
• Projected population growth
• Demographic changes
• Cash rate

While it might be an easy touchstone, Dr Mardiasmo opined that it’s not only necessary, but fascinating to “untangle the different layers of numerous factors that interact and shape property trends, resulting in local market variance”.

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