The Reserve Bank has increased its cash rate from 3.25% to 3.5%. Most major Banks have lifted their varaiable rates inline with the Reserve Banks decision to increase rates.
Federal Treasurer has indicated that interest rates will not stay low forever.
The rise in interest rates can only have a dampening effect on the real estate market. However, that said, I can only see the housing prices fall when supply is increased. Housing prices will start to fall, if and when, the Governments decide to release land for development and developers and builders start to come back into the market.
The Banks have started to tighten their lending criteria and this will make it difficult for homebuyers to obtain a home loan unless buyers have a significant deposit.
For more commentary on the interest rate rise.....see link below
http://www.news.com.au/business/money/story/0,28323,26299332-5016110,00.html
Opinion by Dean Carver
Property Lawyer - Solicitors Property Centre
