Rising Rates Don’t Burst Markets


Concerns that future interest rate rises will dampen property market activity have been quashed by Property Investment Professionals of Australia (PIPA) research.

The PIPA analysis of five periods of increasing cash rate movements since 1994 shows house prices continue to rise even after rate rises.

PIPA chairman Peter Koulizos says it is usually affordability constraints, economic conditions and consumer sentiment that affect property prices.

He says there has been a lot of speculation in the past 18 months that the historic low interest rates in Australia are what is driving property prices so high.

“There are clearly a number of factors at play, including some buyer hysteria, but one of the main reasons for our booming market conditions is easier access to credit, which was simply not the case two years ago when rates were also low,” Koulizos says.