Interest rate rises: what will it mean for Perth property?
We’ve heard a lot in recent days about Australia’s hefty inflation rate and speculation it will force an interest rate rise sooner rather than later.
The Reserve Bank of Australia is under mounting pressure to raise the cash rate after inflation posted a stronger than expected result in the first quarter of the year, but homebuyers shouldn’t hit panic stations just yet.
Mont Property Managing Director Matthew Podesta said there had been a lot of noise about inflation prompting an interest rate rise.
However, Mr Podesta said it was not all ‘doom and gloom’ and the impact on the property market remained to be seen and any effect would likely take some time to filter through.
“A lot is being said about the risk to housing values and possible mortgage stress with an interest rate hike, but the reality is the impact on the housing market is unlikely to be all that significant and will depend heavily on the extent of the rise,” he said.
“Economists have predicted that any potential risk to the housing market is expected to be offset by the tight labour markets were are currently experiencing, robust economic conditions and improved migration rate, which is adding to the demand for properties.”
Mr Podesta said Mont was interacting daily with buyers looking for premium homes and had an extensive database of people interested in purchasing local properties.
“Most analysts do not expect the RBA to raise interest rates until after the Federal election so that means there’s still three weeks to run a new marketing campaign before we go to the polls. If homeowners are considering selling, my advice would be do not delay,” he said.
CoreLogic Head of Research Eliza Owen said historically there had been an inverse relationship between cash rate movements and property price changes, but any impact on the market would not happen overnight.
“While there are some potentially more transitory drivers of these high inflation numbers, such as fuel prices, other factors such as the high cost of new dwellings, rising rents and
education costs take longer to have an impact,” Ms Owen said.
“New demand for mortgages are expected to decline against a lift in the cash rate,
adding further downwards pressure on the rate of housing price growth and prices later this year.”
If you are considering selling a property, or are in the market to buy and need advice contact our team.