House prices will rise unless developers bring new stock to the market: Mark Bouris

First-home buyers will not reap any benefits from record low interest rates if developers don’t bring new stock to market, according to Yellow Brick Road’s Mark Bouris.

Bouris told David Koch on Sunrise that he hoped that in the current circumstances property developers would supply more new property to the market.

“If they do more developments there is more choice for people,” says Bouris.

“But if that does not happen, all that will happen is the prices will rise and the saving that new buyers would ordinarily get from an interest rate cut will be cancelled out because prices will adjust for it,” he says.

Overall, he expects little impact on the economy from the rate cut, commenting that since the GFC people “don’t actually go and spend the extra money they have in their pocket” so “we are not getting the stimulus in the economy we would ordinarily get”.

According to Bouris, the rate cut could spark a price boom, but not necessarily a transaction boom.

His advice to borrowers is to ask their banks what is the biggest discount they can offer them against their advertised rate.

“The rule thumb should be at least a 50 basis point discount with some lenders offering up to a full 100 basis point discount.

“But if you don’t ask you won’t get it.”

For those considering a fixed-rate home loan, he suggests they wait until the big banks bring out their next fixed-rate offerings – not to take up what they currently offer.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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