The housing market is continuing to surge with the national Home Value Index increasing 2.2% in May. Overall, values were up by more than 1% across every capital city for both house and unit values.
THE PROPERTY BOOM
The improving economic conditions coupled with record low interest rates have been creating strong consumer confidence thereby driving the housing market. But there is an ongoing imbalance between supply and demand, with strong demand for housing causing urgency among buyers. Many properties are selling for well above reserve and shocking agents across Australia, so its a highly unpredictable time in the market.
WHAT ABOUT INTEREST RATES?
Banks are already facing pressure to raise interest rates for long-term and fixed rate loans which will end up restricting buyers' borrowing power. Raising rates will help settle the market and increase market predictability, but buyers may not be able to lock in low fixed rate options for much longer. There is general consensus among experts that the 2% fixed rates will not continue to be available from most lenders, and rates are certainly not going to get any lower. This means homebuyers entering the market need to have a long term financial plan for when rates do eventually rise.
We'll continue to post regular updates on the direction of the market to keep you informed, so stay tuned by following our AAA Socials:
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