What Will The RBA’s Latest Rate Hike Mean For House Prices?
In This Week's How's The Market | Edition 44
What Will The RBA’s Latest Rate Hike Mean For House Prices?
Stock Stays Low & The Chicken Or The Egg?
Property Market Is Strongest For One Type Of Home
What Will The RBA’s Latest Rake Hike Mean For House Prices?
Yesterday the RBA governor Phillip Lowe handed down a further 25 basis point rate rise which was unexpected by most of the major banks and economists.
Lowe noted that “inflation in Australia has passed its peak, but at 7 per cent is still too high and it will be some time yet before it is back in the target range”.
“Given the importance of returning inflation to target within a reasonable time frame, the Board judged that a further increase in interest rates was warranted today”.
Whilst the governor never explicitly stated that the recent rise in the housing market was a contributing factor, it is suspected it could have played a role as the housing market is usually a good example of consumer sentiment and spending which could cause inflation to remain high.
Although the RBA has unexpectedly raised interest rates, the Australian housing market is still projected to perform well.
It is probable that interest rates are nearing their highest point, despite the possibility of one more rate hike by the RBA.
Due to a surge in immigration, there will be a sustained increase in demand for both buying and renting homes.
This unprecedented population growth coincides with a struggling housing construction industry in Australia, which is facing widespread company failures.
This growth in demand and lack of supply will continue to be the driving force in the real estate market.
What The Agents Are Saying
Believe it or not, there is still no stock!
I know I’ve repeated this for weeks, though multiple agents in the inner city market are still struggling to get any listings.
Some good auction results over the previous few weeks have encouraged vendors to set up auction campaigns and I have heard of multiple listings being scheduled around the July-August timeframe.
Another common problem I have heard from agents everywhere is that vendors are going to sell as soon as they buy.
Agents have repeatedly stated they have vendors currently in the market looking to buy that have missed out on 3 - 4 properties and will list their property online as soon as they buy.
This creates a domino effect of buyers unable to buy because of lack of listings and unwilling to list because of being unable to buy.
The Wow Factor!
28 Kintore Street, Camberwell, Vic 3124
Massive open voids in an open plan living room always provide a wow factor as they make the room feel massive.
This is a great example of how to add the wide open space at the end of a beautiful period home!
In The Media
Property market is strongest for one type of home
This is a fairly accurate depiction of what we are seeing on the ground.
The top end of the market has been getting greater results in comparison to the middle and lower end as they are typically more affected by interest rate hikes.
Final Thoughts
I anticipate that the market will experience some uncertainty due to the rate increase this week. Based on past weekends following rate hikes, it is likely that this coming weekend will be quieter than previous weekends.
If we continue to see a high auction clearance rate and some great results from the top of the market, I believe there will be a glut of properties that come onto the market over a similar time near July.
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at tristan@tomii.com.au
Happy Buying!
Note: This is my opinion, please seek your own expert advice when making decisions.
