It is interesting how an election impacts the property market. Anecdotally, buyer momentum always stalls leading up to an election. No matter which party wins, as soon as the outcome is announced, certainty is restored, and the property market gets back into action. This election has been no different.
The pre-election interest rate rise, the first in 11 years, has also been a hot topic. We’re often asked if rising interest rates will cause house prices to drop. It is important to remember that a large portion of buyers who have purchased in our area are not as sensitive to the cash rate because they aren’t as heavily reliant on borrowings. RBA governor, Philip Lowe, also highlighted at the recent announcement that, “Households had saved an extra $240 billion over the past two years and the average owner occupier was now more than two years ahead on their mortgage repayments.”
Interest rates aren’t the only factor to impact our market. When you consider other things like household savings, massive growth in home equity, the continued desire for our region, and supply still not keeping up with demand, the outlook is still looking quite positive for the Noosa Hinterland. It is highly unlikely the critical mass it would take to have a negative impact on our local market will be adversely affected by rising interest rates.
In fact, market analyst Simon Pressley points out that interest rate rises over a 6-year period from 2002 resulted in more than 100 Australian cities and towns more than doubling in value. Regional locations performed the best in that cycle. After two years of phenomenal growth, we’re seeing a stabilising of prices now, but could we be in for another surge in prices over the next few years? Only time will tell.