The prospect of interest rises has Aussie home buyers running scared, so says CommSec's latest economic insight. Martin Arnold, equities economist, CommSec, wrote in the report that approved loans were cancelled in droves earlier in the year as the prospect of interest rate hikes in March spooked potential buyers. "Aussies are becoming increasingly financially savvy and with the media fuelling speculation of interest rate hikes, prospective home buyers fled the property market. Now that interest rates are on hold, the value of cancellations should return to normal levels," he noted. The latest data from the Australian Bureau of Statistics showed the value of new housing loans (commitments) fell by 0.4% in March, after a 3.2% rise in February. Investment loans fell by 5% to $6.29bn. Owner-occupied housing (those buying or building homes to live in) rose by 1.7% to a record $14.52bn. The situation is contributing to the low vacancy situation. Vacancy rates in all states are well below the 3% level that generally indicates a balanced market, according to Arnold. "In coming months, vacancy rates are likely to remain low and push rental yields higher, but the prospect of better rental returns has not yet coaxed investors back into the market. The weakness in the investor segment of the property market was likely driven by rampant speculation of interest rate hikes a month or so ago as well as the stellar performance of the Australian share market which has risen over 11% already this year."

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