21/03/2022
Where is the market heading?
About a year ago, everybody was bullish on property market. Now, we are returning back to normal state ie. where experts have different views on where it is going.
Some banks are predicting rise this year followed by falls next year.
On the other hand, some experts like Rob Flux are predicting a bigger jump than the current rise after a slow growth period of six months or so.
Here is Michael Yardney's take on it.
https://propertyupdate.com.au/why-property-prices-will-keep-rising/
Key points from above article:
Interest rate rises impact only around ten percent of property owners ie. First home owners.
Owners with no mortgage are unaffected.
Owners with mortgage have cash buffers and Investors are relatively less impacted because of negative gearing.
House prices don’t fall when interest rates rise, but fall when there’s not enough housing finance available to potential buyers like the recent APRA restrictions as it affects all potential first home buyers, upgraders, and investors, who together make up two-thirds of our housing market.
Interest rate hikes are used by RBA to slow down inflation. Housing prices have historically tended to move more vigorously than inflation rates but always in the same direction. So, if interest rates go up in response to inflation going up, so will property prices.
While some bank economists are predicting that house prices will fall this year or in 2023 as interest rates increase, I'd like to explain why property...