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Buyer sentiment continues to be affected by the dual factors of local market conditions and the overall macro-economic environment. Global concerns took centre stage again last week in the media, as Australian investors became spooked by disappointing jobs data and renewed concerns over the Eurozone credit issues.  $27billion was wiped of the value of the Australian stock exchange on the eve of the federal budget, with CMC market strategist Michael McCarthy saying developments in France and Greece have now resulted in a downward revision of global growth.

Locally, late in the week ANZ joined the other three major lenders in holding back some of the previous week’s official interest rate cut, announcing they would pass on just .37% of the .50% Reserve Bank (RBA) reduction. Interestingly, in what AAP termed a “double grab for cash”, ANZ passed on the full .50% cut in the interest rate payable to deposit holders.  A separate AAP article reported that CBA is due to cut 100 jobs on the back of weak demand from borrowers, closing its mortgage processing unit in Melbourne.

In positive news, a news.com.au article said the RBA has now paved the way for further interest rate cuts, with ANZ’s head of Australian Economics Ivan Colhoun tipping 25 basis point cuts in June, August and November.

Meanwhile in the property market, a Sydney Morning Herald opinion piece said recent price falls do not indicate a bubble bursting, but an “over-pumped Lilo deflating in a drawn-out and largely controlled manner”. The most recent figures from the ABS show the price of detached homes in capital cities has fallen 6.1% since the peak in June 2010. The piece said RBA Governor Glenn Stevens now has solid grounds for declaring victory over Australia’s cash cow attitude to property prices, reflecting on his 2010 comments to David Koch that it would be a “mistake to assume that a riskless, easy guaranteed way to prosperity is to be leveraged up into property.”

The latest finalised auction results from researcher RP Data showed increases in the Sydney and Melbourne clearance rates, recorded at 56% and 59% respectively. Brisbane fell marginally to 28%, while Adelaide remained reasonably level at 38%. Volumes in other capital cities were too low to yield meaningful volumes.

With the future as uncertain as ever and current conditions likely to give rise to some much-needed buyer optimism, we encourage you to carefully review any activity around your property this week.