Rising interest rates will prevent the housing market from overheating and will help create a well balanced market, a real estate group says.
Ray White chairman Brian White says this month’s interest rate rise by the Reserve Bank of Australia (RBA) and the prospect of further increases will prevent the property market from rising too rapidly.
He said the past 12 months had been the most volatile he had known in the Australian property sector.
“There’s nothing worse than a market getting out of control and the residential market has been remarkably strong over the last four or five months,” he said in a statement.
“A booming housing market produces very few long-term benefits. Sure, it’s great for sales over the short term, but then comes the hangover and the pain.”
He said lifting interest rates from near record lows now will help reduce the need for any “draconian steps” later and it well help create a well balanced market.
Gradual rates increases to more traditional levels would help ensure house prices kept pace with inflation.
“We’ve lived for decades with interest rates much higher than they are now and I have little doubt we’ll be absorbing the latest interest rate rise and the other expected increases quite comfortably,” he said.
Consumer confidence was high and people were not as concerned about unemployment as they were earlier in the year.
At the start of the year, people putting their property on the market were doing so out of a sense of despair, but now they’re looking for the opportunity to upgrade or invest, he said.
“We’re getting back to the sort of sentiments you see in a well balanced market.”