Since December 2011, interest rates have been ticking down, and each time they drop, the real economic effect is said to take at least six months to filter through the economy. Now that rates are at the lowest levels since the 1960s, the big question is when buyers, particularly investors, would return to the market.
When sales and prices go sideways, rents just as steadily ratchet up, a few percent here and there each time. People notice they're paying more every month slowly over time, and when they see rates like today's, they whip out the calculator to figure out what they could be buying for the same amount they rent for.
Investors are a little quicker on the take because they won't be moving into a new place, but they do have to be mindful on when the cold market starts to warm up. They like to buy at the bottom when houses are cheap, but they don't want to hold on to something if the economy is going to bump along the bottom for several years more.
Rather than the dead of winter, many prefer the spring thaw — still relatively cheap, but potentially closer to capital gains with rising future prices.
The RP Data-Rismark Home Value Index points this out succinctly with its latest update for the 12 months to August price moves. Its five-capital-city aggregate index value was up 5.61%, with Perth clearly in pole position at +9.37 %.
Second is Sydney at +7.66%, and Melbourne trailed third with a 4.59% increase. Brisbane beat out Adelaide, up 2.88% to a flat 0.22% respectively.
According to Ben Skilbeck, Rismark CEO, investors were likely to drive most of house price growth in the coming months as they took advantage of low interest rates and solid returns.
Investors in housing company stocks should also be looking over their shopping list. Some of the companies that would benefit by higher housing demand are Stockland (ASX: SGP) and Australand Property Group (ASX: ALZ), as well as those that produce supplies, fixtures and building materials like Reece (ASX: REH), GWA Group (ASX: GWA), Boral (ASX: BLD) and Brickworks (ASX: BKW).
Looks like we may have an early spring once the Federal election is out of the way.
Foolish takeaway
There is a season for everything, and buying stocks is no different. Look for the hardier stocks that did better in the hard, cold times because they will be the outperformers when it becomes a seller's market again.
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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned.
