Home News Rate rise unlikely to hold back property market recovery

Rate rise unlikely to hold back property market recovery

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The widely expected 25 basis points (0.25%) rate rise on Wednesday may cause a short-term decline in property transactions but will not be enough to put a lid on the strong recovery in the sector, according to a property research analyst.

Grant Dearlove, residential managing director of Colliers International, believes that the residential property market has too much momentum for it to be held back by a quarter of a per cent interest rate rise.

"Historically, some of the biggest property price hikes have occurred when interest rates were at their highest. Our economy is so strong, and the price we pay for this prosperity is higher interest rates," he said.

However, he pointed out that there will be a slow down in sales volumes in the short term while people assess their personal positions.

"The sales activity normally slows for about one to two months before picking back up again. My advice would be to check your finances, see what you can afford," he said.

"Don't think that if you buy the value of your asset will go backwards - the economy in Australia is too strong for rate increases to have a negative impact."

He added that property investors were leading the charge towards a resurgence in property investment, despite rate rises.

"We're seeing more investors coming back into the market because of the volatility in the stock market and because they're able to secure good rental yields from those that are renting while they search for a home to buy or save for a deposit," he said.

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