Interest Rate Cuts Boost Apartment Sales

Talk of lower interest rates is drawing apartment buyers back into the market, but strict bank lending and high building costs remain obstacles. Meriton, Australia's largest private apartment developer has noted a surge in demand from first-home buyers, downsizers and investors as expectations of rate cuts grow.

The renewed interest comes after a long period of rising interest rates, which had slowed property demand. The Reserve Bank recently lowered the cash rate from 4.35% to 4.1%—the first cut in almost 5 years—following a series of consecutive rate hikes. Buyers are now becoming more strategic, looking for small discounts before committing to purchases.

Sales data suggests investors are returning in greater numbers, accounting for about half of recent transactions. However, developers highlight ongoing challenges, including strict lending criteria from banks and increasing government-imposed building regulations. In some cases, buyers are negotiating minor price reductions of 1% to 3% rather than large-scale discounts.

This shift in buyer behaviour could impact future developments. Developers continue to weigh new projects against financing difficulties and regulatory pressures. While demand appears to be recovering, broader affordability concerns suggest the housing market’s future remains uncertain.

Source: The Australian, MMJ, SBS