Low Interest Rates Boost the Property Market
Although low interest rates resulted in increased prices in some Australian residential markets, the Reserve Bank of Australia observed that they continue to be lower than previous peaks in most markets.
RBA Assistant Governor (Economy), Christopher Kent, said that improved consumer confidence was reflected in the rising clearance rates at auctions. He said that the rates fell significantly in 2011 but are now up to average levels in Melbourne and Sydney.
Kent also noted that, because interest rates were low and housing prices have increased in many parts of Australia, people now have greater faith that housing prices will continue to increase or at least not weaken again.
This is particularly relevant to those hoping to enter the market, including developers and investors.
However, Kent also emphasised that not all markets in the country were being similarly affected. Citing Melbourne as an example, Kent spoke of how there was possibly more supply than demand in the market, particularly for inner-city apartments.