Property market: RBA rate rise will slow price growth but demand will put floor under the market, economists say

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The increase in the cash rate to 4.35 per cent could trigger a pause in activity and price growth, but won’t fully dampen an undersupplied market.

will dent the pace of price growth but not trigger a decline in housing prices in a vastly undersupplied market, economist said.

No crash coming, but expect a slowdown: Undersupply will still drive demand for housing, even as rates rise, economists say.“We saw that happen at the beginning of the cycle, when prices did decline temporarily, but they rebounded quickly,” Ms Toth told“We may see a welcome pause in price increases, but I doubt we’ll see another fall. On the flipside, we’ll probably see a burst of activity in refinancing.

If passed on in full, the extra 25 basis points would lift the monthly repayment cost of homeowners with a $500,000 mortgage up from the extra $1037 they have been paying since rates started rising last year, to $1116, according to comparison site Mozo. The probability had increased of a single-digit decline in national housing prices next year, with prices likely to fall in Sydney, Melbourne and Canberra next year, he said.“I have been concerned for Canberra for a while. I do not believe we’ll see a fall in housing prices in Perth – the momentum is very strong. At this stage, Brisbane is more in the Perth camp.”

 

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