Real Estate Talk Increase in interest rates is unlikely to impact property prices

The recent decision by the Reserve Bank of Australia to increase interest rates is unlikely to impact property prices with a shortage of listings and high demand driving growth, according to the LJ Hooker Group.

LJ Hooker Group’s Head of Research, Mathew Tiller, said strong population growth and tight employment markets have resulted in increased competition for homes adding buoyancy to the market.

“The RBA’s focus at the moment is on reducing inflation and the latest data show it is coming down but remains sticky and is not falling as fast as anticipated,” Mr Tiller said.

“This decision shouldn’t lead to a flood of mortgagee repossessions hitting the market, but it is likely there will be homeowners looking to downsize their mortgage as a way of managing their household budget, so we are expecting listings to slowly rise.

“Property markets are more positive for homeowners who do decide to list with elevated auction clearance rates, rising prices and higher attendances at open homes all pointing to a stronger winter selling season. “

The latest CoreLogic figures show house price recovery continued for the third consecutive month up by 1.2 % in May. In Sydney, house prices increased by 1.8 % during the month and 4.8 per % since January.

Listings remain below the five-year average and demand remains high due to increased levels of immigration and the return of international students. Strong rental growth, low vacancy rates and increased property prices have seen tenants consider making the switch to homebuyers, while investors are also back in the