Have we just hit the bottom of the real estate market?

I thought I would share a couple of things from yesterday that point to a recovery in buyer demand and prices.

Firstly, the NSW State Government yesterday passed legislation allowing first home buyers to opt out of stamp duty when buying a property under $1,500,000.

This starts from today. At a price of $1,500,000 you have an extra $66,700 in savings now to spend on a home.

The new annual stamp duty is $300 plus 0.3% of the value of the land. The extra money buyers now have will increase purchaser demand and quickly flow into price increases.

The second big thing to note is that October inflation figures in the US came out last night at a much lower than expected 7.7%, the 4th decrease in a row from a peak of 9.1%.

On the back of those numbers the Australian Dollar surged 2.3% and the local share market was expected to be up over 2.4% this morning.

The  two flow on effects of this are a weaker US Dollar (stronger Australian Dollar) reduces the cost of goods traded in the global markets that we import which pushes down prices; petrol, cars, your new TV and reduces inflation locally.

The other point is the fall in US inflation will have Central Banks around the world, including the Reserve Bank of Australia, reconsidering whether further rises in interest rates are necessary to fight inflation.

Just something to think about.

Kind Regards,
Jason Guildea