In spite of warnings from the Reserve Bank and a host of commentators, interest rates will become a major key player in the housing market that is not slowing down, according to the chairman of real estate agency Ray White, Brian White.
White said that they posted record sales of $4.1 billion in November, which was higher compared to March’s record of $4 billion “in a market thought to be easing.”
“You would have thought talk of markets cooling would have taken effect, but not as yet,” he said to The Australian Post. “Interest rates are still so low and are only tightening at the edges.”
As the Commonwealth bank increased its rates for new fixed-term mortgages, there were a number of banks that lifted their home lending rates.
Queensland and South Australia are performing well along the southern states, which remain strong in terms of sales, White said. On the other hand, Perth is having trouble and continuing to struggle.
According to a research by CoreLogic stated by The Australian Post, Sydney’s runaway house prices had another increase in November, making its annual price jump to 13 percent.
Moreover, Melbourne is following at 11 percent, Hobart is experiencing an 8.5 increase in price in 2016, Canberra with 8.4 percent, Adelaide with 4.7 percent, Brisbane with 3.9 percent, and Darwin with 3.7 percent.
Even though there were areas with an increase, Perth is suffering a fall down to 3.4 percent growth.
CoreLogic added that ever since house prices began to bounce back in mid-2012, residential prices in Sydney and Melbourne have skyrocketed, 67 percent and 46 percent respectively.
White said that analysts are on the watch on risks to Australia’s AAA and homeowners and buyers’ knowledge on interest rates remain acute.
“It’s hard to imagine, if Australia’s AAA rating was reversed, that it would not have an impact on interest rates,” he said.
Reserve Bank is expected by the financial market that it will lift rates by the end of 2017 with a number of economists tipping in 2018 a 50 point increase.
White is expecting an increase of owners who will sell their properties with low levels of stock available by next year, especially in Sydney wherein there was so much heat in the spring market.
In November, houses for listed for sale in Sydney dropped to 9 percent, a record lower compared to 2015, while Melbourne’s properties for sale that were advertised dropped to 3 percent, according to CoreLogic’s report.
Even though there were drops in Sydney and Melbourne, there were increases in other states that made the tally of the property market to 113,500 homes for sale in November. This was 2 percent higher compared to 2015.
Interest rates are one of the factors property hunters are considering before they make a decision. With the Commonwealth banks increasing its interest rates and other banks are lifting theirs, victoria property broker should become vigilant and know in which bank to trust in case Australia’s credit rating reverses.