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Property values to fall under rising rates

23 October 2009 Reporter

The growth in property values could take a more measured approach if rates climb again in November.

According to RP Data’s head of property research Tim Lawless, a swift rise in rates could dampen much of the current market optimism that leads to measured growth.

“Interest rates are likely to continue their upwards trajectory next month, with many analysts suggesting we may see a 50 basis point rise in November,” Mr Lawless told Real Estate Business.

“The overall affect on the market isn’t likely to be dramatic, as interest rates are rising from historically low levels and returning to an environment that is more aligned with the healthier economic conditions.”

But while the overall effect may not raise alarm bells with real estate agents, they could see first home buyers exit the market quicker than first predicted.

Figures from the Australian Bureau of Statistics showed that the number of first home buyer commitments as a percentage of total owner occupied finance decreased from 25.3 per cent in July to 24.7 per cent in August 2009.

Property values to fall under rising rates
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