Rising Interest rate & Residential Real-Estate Market:

Jatinder pal singh Lamba Posted on 26 Sep 2022

Welcome to my blog about High Interest Rate & rising Interest rate. We all know that interest is controlled by Reserve Bank of Australia; we call this as Official Cash Rates (OCR).

Interest rates are controlled to maintain the economic health and prosperity of the country. This promotes financial stability, low unemployment rates and a steady inflation rate of the country. RBA consider factors like employment levels, inflation, the housing market, gross domestic product as well as consumer business confidence and International economic situation. There is no way anyway can predict which way interest rate will go.

Impact of Rising interest Rate residential Real Estate Market.

When RBA increases interest, lending becomes expensive and usually lenders or Bank pass these interest rates to consumer (if consumer has not fixed their home loan rates - we will discuss Fixed Rate Home Loans in next blog).

Rising interest rates impact customer confidence, and both parties (seller and buyers). As interest rate rises, buyers capacity to borrow money is impacted and buyers cannot borrow enough to purchase their dream home, because of this demand reduces, which further puts pressure on the real-estate market and property prices starts to fall. This further impacts vendor/seller as their investment/property is not likely to give expected returns.

Because of this vendor may postpone the sale of the property, at the same time buyers can delay purchase of property. This slows down the real-estate market.

Thinking Long Term

Historically prices of property rises over a long period of time (8 to 10 years). Buy when the prices are under pressure.

Buy small upgrade later: Buyers can buy a small property for now and upgrade later, once some equity depending up on what stage of life you are also on your financial position, this can be an opportunity to downgrade provided there is built up equity. This could be a good strategy for young couples or first home buyers for reasons such as small family, small budget to purchase, Savings due to Government incentives (such as no stamp duty & availability of First Home Owner Grants

Thinking this as opportunity

Sell property, and upgrade. This can be beneficial for people those who have purchase the property few years ago and have a decent equity in their property which they intent to sell.

Disclaimer: Information in this write-up is not writer’s own views, this has been put together from different mass Medias and under prevailing market conditions (September 2022) and past general trends. Information contained herein is NOT intended (in anyway) to be a source of advice. Blogger is not qualified to provide financial or mortgage broking advice. Before taking any financial/investment decisions please contact industry accredited mortgage broker and/or accredited financial adviser. Writer of this blog and/or associate partners of blogger and/or organisations associated with blogger is NOT responsible in anyway (financially and/or emotionally

and/or otherwise) for any loss and/or damages incurred by taking financial decision after reading this article. Individual is fully and solely responsible for his/her financial/investment decisions.