Interest rate rise unwelcome and unnecessary
REIWA President Rob Druitt said that while the Institute had supported some previous rate rises, in the hope of cooling an overheated market, such action was not needed now.
"The RBA’s decision this week to lift interest rates by 0.25 per cent to 6.75 per cent is unwelcome in the WA market, as things are just starting to pick up again after the boom," Mr Druitt said.
REIWA data for the June quarter shows that housing prices across WA retracted by almost 4 per cent, but had rebounded by around 1 per cent for September.
Mr Druitt said metropolitan Perth was now experiencing a ‘dual lane’ housing market, with strong activity by first home buyers at the lower end and by wealthy owners at the top end of the premium market. There was slower turnover with middle ranking homes.
"This rate rise will add about $10 per week to a typical mortgage and will be keenly felt by first home buyers. However, it will go unnoticed by those who are comfortably off; they will just absorb it," Mr Druitt said.
Mr Druitt said it was uncertain what impact the rate rise may have on rental prices, but they usually put added cost pressures on owners.
"Typically a rate rise will see owners and investors pass on the additional cost to the tenant through rent increases, however this will depend on whether or not the current market will support it.
"The vacancy rate for the September quarter has stretched out to a very healthy 3.4 per cent, meaning there is lots of available stock for rent. Owners may find it difficult to increase rents now that it’s more of a a tenants’ market, but only time will tell."
Mr Druitt said November through to March was traditionally a very busy time in the rental market and may see vacancy rates tighten as people secure a premises for the New Year, a new job or the start of the university calendar.
