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Rising Rates Won’t Dampen Prices

Rising Rates Won’t Dampen PricesRising interest rates won’t dampen house prices, according to a new report by Quay Global Investors.

It says the market is over-estimating the power of interest rates and that the combination of rapidly rising rents and low supply during a period of high demand, means prices will continue to increase.

It says the conditions in the market at the moment are similar to those during some of the strongest periods of property price growth.

The report says there have been many occasions when property prices have moved out of sync with interest rates in Australia.

The latest figures show that during March there were no price declines in any mainland capital city. The median house price for the combined capital cities rose by 0.5%.

Chris Bedingfield from Quay Global Investors says the Australian property market is complex.
“It is not all about interest rates,” he says.

Rental supply will not improve significantly in the short term, according to CoreLogic’s Eliza Owen, as there has been a 47% decrease in the number of property investment loans.
“The reduction in new investment purchases exacerbates the issue of low rental supply and rising rents. Australians need a new source of investment in rental accommodation,” she says.


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