Rises should spur borrowers to "take a considered approach" when buying, peak body says
The Reserve Bank’s interest rate hikes are stabilising the housing market, according to the Real Estate Institute of Australia.
REIA said the latest hike, which brought the cash rate to 2.35%, is likely to spur home buyers “to take a more considered approach” when making a buying decision.
REIA president Hayden Groves said that while the latest interest rate hike will put additional financial pressure on recent home buyers, those who have a solid deposit will benefit from income generated by the latest rise, while property values stabilise.
“In some areas, more listing stock is coming to the market, giving buyers greater choice in a less frenetic market,” Groves said. “Those able to cope with this and any future rate rises are well-positioned to confidently buy a home or investment that better suits their needs.”
Groves said that with some banks delaying higher repayments on existing mortgages by up to two months, the full impact of the rate rise and its effects on household spending has yet to play out. However, he said the banks have already factored interest rate rises into their equations for anyone taking out a mortgage.
“That should add some comfort to first-time buyers in particular,” he said.
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He said that in order to get inflation under control, the RBA had to consider many factors, including retail spending – and there is a lag in that data.
“We have not yet seen the community response,” Groves said. “Retail figures for July show an increase, so it is conceivable that the RBA may start the process of slowing down the size of rate hikes and wait for the data, including the monthly CPIs, to assess the situation.”
Groves said inflation is expected to peak this year before declining.
“Unemployment remains its lowest in nearly 50 years, which is a clear indicator that the economy should remain on track,” he said.
