Nicola Powell: Market not deterred by drawn-out election campaign

June was a headline month, from the UK referendum to the changing election campaign promises. As the political hub of Australia, Canberra can be particularly reactive to federal decisions and events.

Despite the long drawn out election campaign buyers and sellers were not deterred. The latest Allhomes data shows demand over the June 2016 quarter increased by 6.1 per cent compared to the June 2015 quarter, with 1892 sales, an additional 108 properties.

Vendors were also showing market confidence. Over the June 2016 quarter 2130 new vendors listed properties for sale on allhomes.com.au, an increase of 9.5 per cent compared to the June 2015 quarter, an additional 184 properties. The growth in listings waned slightly over June, reflecting those vendors strategically avoiding an auction on Election Day.

Heightened demand for family homes pushed prices up by 5.79 per cent over the year to reach a median sale price of $610,250 over the June quarter. Following a jump over May, unit prices lost all that was gained, falling by 1.48 per cent in June to $381,250, sliding 0.49 per cent over the year.

Following a rise in the May Westpac-Melbourne Institute Index of Consumer Sentiment, confidence slipped slightly in June. This blip could be due to China’s economy slowing and the UK referendum that sent financial markets into shock. It is also likely to be a correction from the jump recorded last month. Sentiment remains in positive territory and it is the latest interest rate cut that appears to be the main push, an evitable pattern that follows a rate cut.

The long-term ramification of the UK referendum is hard to determine. Investors may start to look at the Australian property market as a safer place to invest. However, with tighter lending conditions, particularly to foreign investors, it is unlikely to become a major cause for concern.

The global economy is growing even if it is at a slower pace. This allowed the Reserve Bank of Australia to keep official cash interest rates at 1.75 per cent in June. The hold on rates will help to keep the local property market steady throughout winter. August is still the predicted month for another rate cut, if not, many economists envisage another cut before the year is out.

Nicola Powell is a property expert for Allhomes. Twitter: @_DataGen. The MIX106.3 Real Estate Show, Saturdays 9-10am.