THE latest interest rate rise of 0.25% to 4.5% will not stop the Australia’s out of control property market, according to industry experts.
The Australian Property Institute’s (Vic) president Steve Simpson said the latest increase will have little or no effect on retail, commercial and office markets as these markets are more influenced by capital growth, vacancy rates and global financial conditions than interest rate changes.
In the residential property market, the Real Estate Institute of Australia’s president David Airey said rate increase does little to solve the real problem currently facing the property market; supply.
“One of the major issues at hand, which will not be solved by continuous rate increases, is the lack of supply in the housing market.
“The current level of housing supply in Australia is insufficient. Increasing interest rates only makes a bad situation worse by negatively impacting on the ability of developers to service loans, fuelling the issue of a growing shortage of available housing,” Airey added.
In the commercial market, Simpson expects pent up demand and low levels of stock will most likely see values hold firm.
“The only caution may be whether owner occupiers will pull back in the suburban office market but having said that, prevailing historically ‘low’ interest rates and expected capital growth over time still see this market retain good interest/demand over the short to medium term,” Simpson concluded.
Australian Property Journal
