Interest Rates, Land Values to Increase Until 2009

INTEREST rates are likely to stay at or slightly above current levels until 2009 before heading down, according to property experts at a seminar hosted by the Urban Development Institute of Victoria at Crown Casino earlier this week.

Speaking about the residential market, analysts from property research house Charter Keck Cramer warned that land prices in estates in Melbourne's suburbs were likely to increase over the next two years, as demand for vacant blocks started outstripping supply. They also warned that high taxes and government charges, which can equate to about a third of the total price a developer pays for land, was eating into developer profit margins - also adding to the case for higher prices.

In regard to the market for established homes, Charter Keck Cramer pointed to a discrepancy in the performance of the inner and middle suburbs, which are quite strong compared to the outer suburbs, which are "flat".

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