While Tuesday’s interest rate rise didn’t come as a surprise, it still hurts many mortgage holders who are already struggling. The November rise marks the RBA’s fifth increase this calendar year following hikes in February, March, May and June, with further rises probable.
The point of interest now is, how will this impact the housing market?
Indications are that the latest rise could slow the escalating growth in property prices we’ve been seeing, but experts suggest it won’t be enough to bring them to a grinding halt. There is no doubt that repeated interest rate rises over the past 18 months have reduced buying capacity, but it is other economic forces which continue to push record house prices.
These include the short supply of available housing, the tight rental market with record low vacancy rates, and population growth connected to booming immigration.
In October 2023 the PropTrack Home Price Index reported the tenth consecutive increase to house prices up 4.93% nationally. According to PropTrack, Melbourne saw 0.28% growth during October with 0.64% annual growth bringing the median Melbourne house price to $815,000.
While the economic forces outlined above will remain in play, economists say they do not expect the current price surge to continue into 2024.
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