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PRD Whitsunday  →  News  →  WATCH: May 2, 2022 Whitsunday Weekly E-News

WATCH: May 2, 2022 Whitsunday Weekly E-News

WATCH: May 2, 2022 Whitsunday Weekly E-News

Hi, Annette Neil from PRD Whitsunday.

This week, I thought I'd talk about a scorching topic and certainly something I saw this morning when I woke up and checked the news and that is what will happen next week with a potential interest rate hike.

Now it is certainly a hot topic and something that there are many differing opinions on. So this week I thought I'd bring you the thoughts of our chief economist here at PRD research.

Dr. Astii states that to look at what may happen, we really need to look back at what did happen in the last period where we saw rates hike over a period that ultimately pushed property values down a little bit. Now we're talking back to 2009 and 2010. Now, back then, we saw the first-rate height come through, and it actually had the opposite effect as we saw more sales happened as people rushed out to lock in their property before further potential hikes. That has shown us that within a period of about 12 months over sustained hikes of 175 basis points that we then saw property values begin to decline. So although there is a lot of doom and gloom media out there at the moment, we will have to see particularly

high-interest rate hikes over a period of time before it does seem to have an effect on property values.

Interestingly, we're operating in a slightly different market than we were back then in 2010 and at the start of the GFC, where we were heavily reliant on international demand in our housing market. It's really quite interesting that has almost disappeared, and we're looking at, you know, the COVID-19 pandemic has had an effect. Also, the government homeowner grants had a massive effect on the demand for housing.

I've spoken about that numerous times. We've seen demographic changes. That's what I've also spoken at length about. People are looking to the regions and looking to change where they live. At the moment, when we talk about interest rate hikes, there are markets within our general market.
So we have the Australian housing market, then we go to the states. Now it's almost broken down by regions and also types of properties.
You may see that houses and units are performing at different levels.
Although there's plenty of information out there, plenty of fear-mongering, I guess you could say it will be a long-term sustained series of rate hikes before we tend to see too much change to the demand for property here in Australia, ultimately to prices.

Until next week, you can read the full release by our chief economist, which is found in this link.

https://www.prd.com.au/corporate-news-page/article/will-cash-rate-hike-result-higher-property-prices/

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