Interest rate will definitely affect property price movement yeah
Prediction not necessary. It may have happened elsewhere.
Today, I spoke to 2 friends about the property market. I told them that no one can predict the property market movements but if we are looking at the world, then we could use the advanced property markets as a comparison. It will also allow us to be able to see ahead on the potential happenings. For example, city centres will become very expensive and that’s when people start to buy further away from the city centre. This is also why the term called suburb becomes common.
Interest rates are not friendly to property price
What has happened recently is that interest rates are rising everywhere in the world. Every central bank is putting a priority into fighting against inflation. Generally, they do not want prices to move upwards. No matter what products, services or even home prices. Stop it from rising any further even if cannot push it downwards. Here’s one such movement and how the interest rate has stopped the property price from moving up further.
Article in smh.com.au With the interest rate rise, it has halted the increase in Perth property prices. Based on the new data from Proptrack Home Price Index, home prices across Australia has shown a decrease for the first time since the start of the pandemic. It dropped 0.11 percent in May. (Yes, this is one-tenth of 1 percent…)
Meanwhile, Perth house prices grew marginally in May. Median value growing just 0.24 per cent while unit prices have continued to fall across the city, dropping 0.2 per cent. For more information, please refer here: Article in smh.com.au
It’s not solely due to the interest rate
If we think logically, an interest rate increase is not likely to cause a huge dent in a monthly home repayment. Unless of course the increase is like 5 percent… In Australia, the increase was 25 basis points. (Yes, this is lower than 0.5 percent). Here was the earlier article and it includes news of many other countries too. The War Between Interest Rate and Inflation However, this increase would have dampened the sentiment and when sentiment is dampened, then it will take time for it to recover. It’s like confidence. Once lost, it does take some time to rebuild. What’s more important is that it does not descend into a confidence crisis.
Good learning for all of us on how interest rate will interact with property price.
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