The Real Estate Institute of Australia (REIA) said the latest interest rate rise of 50 basis points to 2.35 per cent is likely to see home buyers take a more considered approach when making a buying decision.
REIA President, Mr Hayden Groves said while the latest interest rate rise will add financial pressure on recent home buyers, those with a solid deposit will benefit from income generated from the latest rate rise, whilst property values stabilise.
“In some areas, more listing stock is coming to market, giving buyers greater choice in a less frenetic market. 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.”
Mr Groves said that higher mortgage re-payments and its consequent impact on household spending is yet to fully playout as some banks delay higher repayments on existing mortgages by up to two months but added that, “the banks would have already factored in interest rate rises into their equation for anyone taking out a mortgage; that should add some comfort to first-time buyers in particular.”
“To get inflation under control, the RBA has to consider so many factors, such as retail spending and there is a lag in the data. We have not yet seen the community response - retail figures this week 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 data, including the monthly CPIs, to assess the situation,” he said.
Mr Groves said inflation is expected to peak this year before declining which will certainly have an impact on rates.
“Unemployment remains its lowest in nearly 50 years which is a clear indicator that the economy should remain on track,” he said.
Mr Groves added that we have to keep things in perspective and recognise that the source of inflation is largely due to supply constraints and not rampant demand driven from an overheated economy.
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