The latest interest rate hike and the risk of flipside rise in the coming months could slow Australia’s property market rebound, but won’t be unbearable to halt remoter price rises, experts say.
Tuesday’s visualization to increase the mazuma rate to 4.35% comes as a fresh wrack-up to homeowners who have once seen their mortgage repayments skyrocket over the past 18 months.
The November rate rise had been widely expected without higher-than-expected inflation in the September quarter gave the RBA little nomination other than to increase interest rates in order to get inflation when to its 2-3% target wreath within a reasonable timeframe.
Recent comments from RBA governor Michele Bullock had signalled the wall has a low tolerance for permitting upper inflation to linger and risk rhadamanthine entrenched.
But plane though the latest interest rate rise will remoter reduce home buyers’ borrowing capacities, economists say the impact will be offset by increasingly powerful factors driving the home price surge wideness the capitals.
How the latest rate rise could stupefy the property market
PropTrack senior economist Eleanor Creagh said record levels of net overseas migration, limited housing stock and a supply pipeline remoter restricted by the construction slowdown had offset the impacts of interest rate rises, helping push up prices.
“This spare increase in interest rates may slow the current pace of home price growth but is unlikely to deter these gains, with strong population growth, tight rental markets and a housing shortfall fuelling remoter price rises.”
The latest PropTrack Home Price Index shows home prices are up 4.93% once this year.
Prices are tipped to rise a remoter 5% next year, equal to NAB, plane though the wall has predicted a remoter rate hike in February.
"We expect the workbench to form the view that a single 25 understructure point welding to rates is not unbearable to mitigate the risks on inflation," said NAB senior economist Alan Oster.
There were signs that price growth was slowing, Mr Oster said, including an increase in listing and vendition volumes that could soak up demand, meaning prices wouldn’t rise in 2024 as rapidly as this year.
"We’re once seeing softness, therefore we’re not expecting the current surge to continue," he said.
An increase in listing numbers and vendition volumes has once slowed price growth, equal to NAB senior economist Alan Oster. Picture: Andrew Parliaros
AMP Capital senior economist Shane Oliver said the latest interest rate rise would reduce borrowing capacities by well-nigh 2%, and the risk of flipside hike would alimony proprietrix demand subdued, remoter slowing price growth.
"This will underscore that slowing in price growth that we have seen and runs the risk that prices will turn negative again," he said.
"We’ve seen vendition clearance rates slowing down, which suggests that still upper interest rates have started to get the upper hand then over the huge supply shortfall we have on the when of booming immigration," he said.
"Historically when [clearance rates] fall unelevated 60%, its associated with falling prices."
However, easing demand wasn’t a bad thing for buyers, Mr Oliver said, considering prices have reached record highs in Sydney, Brisbane, Perth and Adelaide.
"Life is unchangingly easier for buyers when there’s less demand out there," he said. "When prices are lanugo and nobody wants to buy, and when vendition clearance rates are at a low, thats normally a good time for buyers, thesping they’ve got the finance."
"For those who still have the finance and can put their hands over their ears and ignore the negative commentary, it does provide opportunities."
Will the RBA raise interest rates again?
A slight tweak to the language in the RBA’s statement pursuit its November rate visualization made it a little less likely that flipside rate rise was on the cards, equal to Mr Oliver.
"The Reserve Bank’s comments are a bit hawkish, but they seem to have relaxed their hiking bias," he said. "They’ve probably finished [raising rates], but I’ve been too optimistic on this for a while now."
Mr Oster said there was a endangerment of flipside rate rise in December, but a February rate hike was increasingly likely given the workbench would have the endangerment to review the next round of quarterly inflation data at that meeting.
The big banks are split over whether the RBA will raise rates again. Picture: Getty
Westpac senior economist and former RBA teammate governor Luci Ellis said if inflation proved to be increasingly persistent than expected, the RBA would respond.
"Over the next few months they’re going to be watching the data very thoughtfully — particularly inflation, unemployment and the world economy, as well as spending here in Australia — for any remoter surprise that might induce them to act again," she said.
"But if things turn out as they expect, they may be content to hold from here."
Commonwealth Wall throne of Australian economics Gareth Aird said it was unimaginable that there would be unbearable vestige in data released over the next month to justify back-to-back rate increases.
"We think the probability of a follow-up 25 understructure point rate hike in December is quite low," he said. "February 2024 looks the increasingly likely month if the RBA is going to pull the rate hike trigger again."
"Our expectation is that there will be unbearable signs in the data by early next year for the RBA to conclude that a remoter increase in the mazuma rate is not warranted."
CBA expects the first rate cut will be delivered in September next year, while NAB believes there won’t be a cut until November.