When RBA Governor, Philip Lowe announced the Board’s decision to leave the official cash rate unchanged at 1.50 per cent, most economic predictions were proven right. However, interest rates remain in the spotlight as market commentators continue to discuss the future of Australian property.
For example, research from UBS economists recently weighed up the markets. It noted that whilst plenty of new development, low interest rates and strong population and employment growth worked in the housing markets favour, the flip side (and potential risk) is the high debt levels, low wages growth and slowing foreign investment. In short, the conclusion from UBS was that we are more likely to see a "plateau" in the housing markets rather than a correction, on one condition: that the RBA does not lift interest rates in the foreseeable future.
In its first statement of the year, the central bank said housing prices have changed little over the past six months, although property values have recorded slight falls in some areas. It further addressed rising household debt, stating APRA’s measures and tighter lending standards “have been helpful in containing the build-up of risk in household balance sheets”.
Overall, it seems the future of real estate markets across the country will, for the most part, be influenced by the future of interest rates.