Interest Rate Reduction Leads to Spike in Auctions in Major Cities

The number of auctions being held over the next two weeks is set to skyrocket as sellers look to cash in on the Reserve Bank’s interest rate cut.

The RBA cut the official cash rate by 25 basis points on Tuesday, offering relief to current mortgage holders while enhancing the borrowing power of potential buyers, a move anticipated to drive up housing prices.

Sellers seem eager to capitalize on the predicted price increase, reflected in the sharp rise in scheduled auctions this weekend, particularly in the two biggest property markets.

“This week’s cash rate reduction will further boost prospective buyers’ maximum borrowing capacity, but it’s doubtful it will enable them to enter the property market more quickly,” noted Sally Tindall, Canstar’s data insights director.

“When buyers see their maximum borrowing budgets rise at the same time, on the back of a policy change or a cash rate cut, the biggest winner in the equation is often the person selling the property.

“This cut will be a shot in the arm for the property market.

“However, if homeowners aren’t equally encouraged to list their property for sale, then a surge in demand could see property prices rise even further.”