The recent interest rate hike has solidified the belief that the Australian economy has "turned the corner" and future rises will trigger house price increases, a leading Melbourne buyer advocate has claimed.
JPP Buyer Advocates director Ian James pointed to strong weekly sales in directly after the last interest hike, which rates from 3.0% to 3.25% earlier this month, as evidence that investors were reacting positively to the changes.
He continued, "More than slowing the property market down, I believe the next couple of interest rate hikes will push prices even higher." James added that although some investors were being turned off by the current state of the world economy, positive local factors were encouraging others to enter the market.
James pointed out that supply and demand would remain the most important factor. He added, "Whilst the world economy will recover slowly and even the Australian economy will take time to get back to its peak, everyone needs somewhere to live. Whether renting or buying this means house and apartments will become much more valuable than they are now."
James also predicted a shift in the city's density patterns over the coming decade as Melbourne's population increases. He expects to see "colossal increases in prices on apartments within the 10km radius and also on properties with over 600sqm of land up to about 30kms from the Melbourne CBD".
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