Australian Property Market on the Rise: RBA’s Rate Hike Signals a Shift - Property Inc

Australian Property Market on the Rise: RBA’s Rate Hike Signals a Shift

In the wake of the Reserve Bank of Australia’s (RBA) latest interest rate hike, the Australian property market is experiencing a dynamic shift. CoreLogic’s Home Value Index (HVI) indicates a 0.9% rise in home values for October 2023, a notable increase from the previous month’s 0.7%, as reported by Henry Thai. This upsurge brings the national HVI tantalizingly close to a new record, according to CoreLogic research director Tim Lawless, who anticipates the peak could be reached by mid-November.

However, the market is not without its complexities. The quarterly growth has seen a deceleration, with capital city dwelling values only increasing by 2.6% in the three months leading to October, a drop from the 3.7% rise in the preceding quarter. “The slower rate of appreciation can probably be attributed to a combination of higher advertised stock levels alongside stretched affordability,” Lawless explains.

The RBA’s decision to increase the official cash rate to 4.35% is a move that experts believe will cool the market. Mina Martin, in her analysis, cites several factors behind this rate hike, including tight labor markets and rising inflation, which saw a jump to 1.2% over the September quarter. This uptick in interest rates is expected to influence consumer sentiment negatively, potentially “denting buyer demand at a time when advertised stock levels are rising,” according to Lawless.

Industry professionals also weigh in on the rate’s impact. Richard Stevens, CEO of LocalAgentFinder, warns that the rate hike could significantly affect the housing affordability and the breadth of the property market buyer pool. Conversely, Shiv Nair, director of Ray White TNG-Glenwood in Sydney, sees an opportunity for property owners to sell promptly, noting a current surge in investment property sales.

Despite the concerns over affordability and increased mortgage repayments, which Lawless estimates to be an additional $80 per month on a $500,000 loan, the market may still find support. Factors such as housing shortages, low vacancy rates, and increased overseas migration are likely to exert upward pressure on home values. As Lawless posits, “it’s unlikely that prices will decrease soon,” suggesting a resilient market amid the economic adjustments.


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