With interest rates tipped to increase in the near future, property players are confident the market in Western Australia will remain strong.
With interest rates tipped to increase in the near future, property players are confident the market in Western Australia will remain strong.
It is widely predicted the Reserve Bank will opt for a 0.25 per centage point increase in the next month, which has caused some ripples on the water of the otherwise smoothly running economy.
Hegney Property Valuations executive chairman Gavin Hegney said, as suggested by treasury, he expected two quarter percentage rises during the next six to 12 months but believed the market was more than capable of withstanding the rises.
“It is the fear of interest rate rises that has the most impact on the property market rather than the actual impact they have,” Mr Hegney said.
“Wages are expected to go up 3.75 per cent over the next 12 months, which translates from an affordability point of view into interest rates being able to go up 1 per cent.
“Further, anyone assessed to take out a loan in the last five years has had an extra 1-2 per cent increase in interest rates taken into account.” He added that the market could comfortably afford up to a two per cent increase in interest rates.
Housing Industry Association WA executive director John Dastlik said any interest rate rise always had an impact on the housing sector.
“With interest rate rises, people always step back and consider whether to buy or not,” Mr Dastlik said.
“The housing sector has gone by the wayside in terms of contribution to debate about interest rates, and it is other factors which are impacting the Reserve Bank Board, like inflation and the labour shortage.”
An interest rate rise could help steer people away from the residential investment market and into commercial investments, according to Burgess Rawson managing director Geoff Potter.
“We are getting quite a lot of people into the commercial property market now, and I suspect that if a cooling off of the housing market occurs, there will be more pressure on the commercial sector,” Mr Potter said.
Commercial property would not be affected by an interest rate rise due to pent up demand and lack of properties for sale, he said.
A survey undertaken by the Roy Weston Group over the last week indicated that even if interest rates rose 0.5 per cent during the next six months, it was unlikely to deter buyers from a decision to purchase.
The survey showed a vast majority of homebuyers in WA had factored in a rise in interest rates, with 85 per cent indicating they expected rates to rise within the next six months.