Will the Upward Trend in Interest Rates Slow Australia's Property Market Revival?
Will Rising Interest Rates Hinder Australia's Property Market Recovery?
The Reserve Bank of Australia's decision to raise the cash rate to 4.35% on Tuesday has left many homeowners feeling the strain of already rising mortgage repayments over the past 18 months.
This increase, expected due to higher-than-forecasted inflation in the September quarter, signals a potential challenge for the property market's recovery.
While this latest rate hike is expected to limit homebuyers' borrowing power, some experts believe that property price growth may continue to rise.
Contributing factors include an influx of overseas immigration and a persistent shortage of housing supply.
Key Insights:
- National Australia Bank (NAB) predicts that the recent rate increase will lead to signs of slower price growth.
- AMP warns that this hike, along with the possibility of further increases, could reduce borrowing capacities by around 2%, which would lower buyer demand and potentially curb price growth.
- Commonwealth Bank expects that rates will likely continue to rise through 2024.
Despite the potential headwinds posed by rising interest rates, a combination of factors—such as immigration and housing supply shortages—could continue to drive property prices upward, complicating predictions for the market's future trajectory.
Francesca Luccitti
Principal
0430 393 396
[email protected]
www.cumberlandrg.com.au
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