The Reserve Bank's decision to keep the cash rate on hold will have a positive effect on Canberra's property market, experts say.
The decision to keep the cash rate at 4.35 per cent after three consecutive hikes was announced by the bank's governor, Michele Bullock, on Tuesday, June 16.
Sam Dyne from Stone Real Estate predicted a repeat of the COVID-19 era hike cycle, where buyers held off during the consecutive raises, before committing to purchasing during the hold period.
Mr Dyne said most buyers in Canberra were owner occupiers, rather than investors, who were more likely to hold out until the cash rate went down again.
"As soon as we get to a period where they recognise that rates are on hold, everyone tightens their belts and goes, 'Alright, we've got to move on with this, this is the new normal'," Mr Dyne said.
"They readjust their borrowing capacity, they know what they can afford - time to buy."
Canberrans paid an average of $131 more per month after the last month's rate rise, according to modelling done by ACM, the publisher of this masthead.
At the same time, house prices in the ACT dropped for the first time in a year, according to Cotality data. Apartments, which have been decreasing in value for some time, are continuing a downward trend.
Houses in the ACT now cost a median $1.04 million, while the median apartment is valued at $598,931.
Mr Dyne said he would not be surprised if there was a further dip in house prices, but that it would ultimately level out again fairly quickly.
"I don't think they'll go down much more, but I think growth will be a lot slower over the next few years than it has been," he said.
Although the cash rate hold had been widely predicted, financial experts are split on whether another hike can be expected before the end of the year, according to modelling by Finder.
Finder's home loans expert Richard Whitten said that while the hold was a welcome reprieve, home owners were not "out of the woods".
"The cash rate remains at its highest level in years, and our data shows 40 per cent of home owners were already struggling to pay their mortgage in May - up from 35 per cent in January," Mr Whitten said.
"With more than half of our panel predicting another hike is just around the corner, now is the time to act. If you haven't haggled with your bank or looked into refinancing since the start of the year, you could almost certainly be getting a better deal."
Theo Koutsikamanis from Bastion Property Group said that buyers would continue to be in the market regardless of how high interest rates climbed.
"There's concern and people are holding back, but at the same time, people are transacting based on their life," Mr Koutsikamanis said.
Mr Koutsikamanis encouraged buyers to not hold out for a specific cash rate or season, because it was difficult to predict where the market would sit in six or 12 months.
"The punchline is, do it when you're ready, don't wait for the market or don't wait on a season," he said.
Mr Dyne said he did not expect major changes to the ACT property market because of last month's federal budget.
The portion of investors in Canberra had always been low, Mr Dyne said, because of high land tax, and the changes to negative gearing and capital gains tax were unlikely to significantly change the demographic of buyers in the ACT.
"I haven't sold many properties to investors in Canberra in the last two years anyway. It's not been a really appealing, attractive spot anyway, so I'm not actually expecting too many changes in Canberra," Mr Dyne said.
However, he expected more change from the more recent ACT budget, which was handed down last week and included a total exemption from stamp duty for first-home buyers.
"Getting rid of stamp duty for all first-time buyers is super exciting. I've already had a few people call me about that," Mr Dyne said.
Mr Koutsikamanis agreed, saying he had already had buyers reaching out with larger offers because of the exemption.
"I think what it's really going to do is it's probably going to push someone from going into a townhouse into a free-standing house," he said.
