Even in light of consecutive 0.5 percent rate
hikes, LJ Hooker’s head of research says the RBA board's action shouldn't have
a dramatic impact on Australia's property markets.
Mathew Tiller has said the Reserve
Bank of Australia’s decision to move the cash rate by 0.5 percent, marking
the third consecutive month of increases, was not unexpected, especially with
inflation continuing to pose a problem for central banks around the world.
While early signs indicate domestic
demand pressures on inflation will ease, it will be a while before it brings
any short-term relief – and it is having an impact on Australia’s property
According to the head of research,
"cost of living pressures combined with rising interest rates have seen buyer
demand begin to soften from the record highs experienced last year.”
Overall, it’s having an impact on
dwelling values – "however, each state and territory tells its own story.”
"Prices are falling in Sydney and
Melbourne where supply is rising above demand resulting in a decline in
"In Adelaide, Perth, and Brisbane we
continue to see very low amounts of properties on the market for sale and
values have continued to climb,” he continued.
But while it has seen buyers become
more hesitant, there’s still plenty of pent-up demand that should sustain the
market moving forward, according to Mr Tiller – and it’s thanks to those who
have missed out on securing a property over the past two years.
According to LJ Hooker, with some of
the competitive heat dissipating within the Sydney and Melbourne markets,
buyers are now taking their time to look around and ensure a property will meet
These buyers are being supported by
ongoing government incentives – especially those targeting first home buyers –
and will "ensure a healthy demand remains in the market” even as it continues
to slowly soften, Mr. Tiller explained.
"Such incentives combined with
employment security will help put a floor under the buyer demand and reduces
any possibility of a sharp market downturn.”
Mr. Tiller’s positive spin on the
interest rate rise has been seconded by Real Estate Institute of Australia
(REIA) president Hayden Groves, who has suggested that interest rates would
"simply stabilise rather than significantly disturb Australia’s real estate
He believes the RBA board’s decision
would "not slump” Australia’s property industry, especially given the recent
evidence of a rising number of new housing loans and investment loan commitments
through to May 2022.
In addition, first home buyer levels
remain 6.9 percent higher than they did in February 2020, prior to the onset
of the pandemic.
While acknowledging the pain that
would be caused by rising rates, he said there had been "no doubt a
contributing factor in stabilising Australia’s record house price growth”.
"The latest rise of 0.5 percent will
certainly affect the housing market however other factors such as consumer
sentiment due to uncertainty about inflation, access to building supplies and
labor, along with worries about wage growth are impacting the current economic
climate,” he said.
He raised a number of other issues as
key concerns for the industry at present: Construction company liquidations,
future supply pipelines, and therefore, affordability.
The president said the affordability
piece would need to remain an urgent priority for governments across the
country, emphasizing the importance of a national plan to address housing
affordability and supply.
RealRenta has all the tools that a property manager has but for
less than ¼ the cost of a property manager.
Join now and the cost is less than a cup of coffee a week to manage your
RealRenta also has a free vision, so why not check it out
Wednesday, 6 July 2022