The decision by The Reserve Bank not to increase interest rates at its July 2010 meeting will help to restore confidence back into the Perth real estate market according to Stuart Cox, Managing Director of The Peard Real Estate Group.
Mr Cox said that expectations about where interest rates are heading has historically been a key driver in the level of confidence amongst property buyers.
"During the last quarter of 2008 early 2009 there was an expectation that interest rates would fall and stay low for some time and as a result we saw a big surge in activity by property buyers over the second half of 2009.
"This strong activity led to a resurgence in property prices in late 2009 and early 2010 and underlines how the property market can quickly recover providing confidence levels rise.
"In contrast, during the second quarter of 2010, rising interest rates have fuelled the expectation of even higher interest rates and this has caused many buyers to take a more cautious approach to the property market.
"We are now moving into a climate where there is every expectation that interest rates should remain stable for some time and this in turn will give greater confidence to property buyers to make a decision about buying a property.
"Overall, we have reached a tipping point for interest rates because The Reserve Bank understands that if interest rates moved any higher, it would cause considerable pain for property owners, especially people who recently bought a home for the first time. Official interest rates have now been held steady for the second month in a row.
"With Western Australia's economy performing strongly, it will only be a short period of time before confidence returns to the local property market and we see increased property sales especially in the sub $450,000 price range," he said.