REIWA CEO Cath Hart said the WA property market would weather this week’s interest rate rise.
“The market has proven to be extremely resilient in the face of the 10 previous rises, and we expect it will adjust to this one as well,” she said.
“We haven’t seen the significant price drops experienced in east coast markets, in fact we’re one of only two capital cities to record growth since rates started rising.”
However, Ms Hart said the constant interest rate hikes had impacted parts of the market.
“The number of loans to first home buyers has decreased over the past year, as their confidence and borrowing capacity has been eroded,” she said.
“reiwa.com data also shows that sales activity in the under-$500,000 price bracket has fallen since rates started rising. This is the part of the market where buyers’ and homeowners’ budgets are likely to be more greatly impacted by the effects of the rate rises and cost of living increases.
“The rental market has also been affected. Some investors have decided the significant increase in their mortgage repayments has made owning an investment untenable and have sold. This reduces the supply of rental properties and increases pressure on rent prices.
“Also, current market conditions favour investors increasing rents to potentially recoup some of their increasing costs. This isn’t always the case.”
Ms Hart said the full impact of the eleven interest rate rises would take time to flow through to the economy.
“We know there is a lag between when rate rises occur and the effect on inflation, we also know there are numerous households on fixed interest rates that haven’t yet felt the financial impact of the interest rate changes,” she said.
“While mortgage holders with variable loans have been adjusting their budgets gradually over the past year, the sudden increase in repayments is likely to be a shock for those coming off relatively lower rate fixed loans.” \
Sourced from REIWA