Housing market soft

The RBA’s November rate hike had a negative impact on housing affordability, recent research has found.

According to RP Data’s latest Rismark Hedonic Home Value Index, the interest rate hike also caused home values to slump in the second last month of 2010.

Home prices in Australia’s capital cities sunk by 0.2 per cent in November, making home values lower now than the levels reached in March 2010.

I suspect the RBA’s decision to lift the official cash rate was one of the key drivers of the soft landing in Australia’s housing market. With the major banks increasing interest rates above the RBA this has only added to the problem.

Since their peak in May 2010, capital city home values have fallen by 1.0 per cent in raw terms on the back of interest rate hikes.

It appears the property market is in for another year of minimal growth. Great news if you are looking to purchase. Bad news if you are a home owner.


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