Interest rate rise not all bad
ALTHOUGH homeowners with mortgages will be tightening their belts after the Reserve Bank yesterday lifted the cash rate for a third month in a row, the Gympie real estate market may benefit from the rise.
Gympie property valuer Chris Mount said the rate rise may boost the number of house sales in the region because of our housing affordability.
He said higher interest rates made housing unaffordable at the Sunshine Coast resulting in buyers looking to cheaper areas like Gympie in which to invest.
“I have always argued that an interest rate rise isn’t always bad for the Gympie market,” Mr Mount said.
“It makes us more affordable and better value in comparison to the Sunshine Coast.
“If you have to borrow money you are better off borrowing $300,000 for a place in Gympie than $500,000 for a house at the coast,” he said.
Gympie real estate agent Nathan O’Neill, from Harcourts, backed up Mr Mount’s comments, saying he didn’t think the interest rate rise was all bad news.
“I don’t think it’s the best, but it’s not all doom and gloom because Gympie is still so affordable,” Mr O’Neill said.
Mr Mount said the 20 per cent property increases that had been registered in the capital cities hadn’t eventuated in Gympie.
“The Gympie market has been stable the past year, there has been no up or downward movement,” he said.
That’s one of the reasons Mr O’Neill says it’s a great time to buy in Gympie Region.
“It’s a buyer’s market,” he said.
“The market is still strong, but your property has to be priced right to meet that market. Sellers have to be competitive with pricing. If you price it right it will sell,” he said.
But for those Gympie residents who already have an average mortgage of $300,000, they will have to find another $50 for monthly repayments after the RBA raised the official interest rate 25 basis points to 4.5 per cent on Tuesday.
It was the third consecutive monthly increase and the sixth hike since October.
Reserve Bank governor Glenn Stevens said with the risk of a serious economic contraction in Australia having passed some time ago, the board had been adjusting the rate to a level consistent with average borrowing rates during the past decade or so.
“As a result of today’s decision, rates for most borrowers will be around average levels... a significant adjustment from the very expansionary settings reached a year ago,” he said in a statement.
“The board will continue to assess prospects for demand and inflation, and set monetary policy as needed to achieve an average inflation rate of two-three per cent over time.”
The rate increase spells bad news for the Rudd government, coming on the day the latest Newspoll shows Labor slipping behind the coalition for the first time since 2006.