Housing market feels effects of 2010's rate hikes

Tuesday 01 February 2011

Article by Mozo

House prices rose slightly in the final quarter of last year but remained well below peak levels as 2010's interest rate rises continued to bite.

Housing market feels effects of 2010's rate hikes

The latest RP Data-Rismark Hedonic Home Value Index rose by a seasonally-adjusted 0.4 per cent in the December quarter for a modest annual growth rate of 4.7 per cent across Australia's combined capital cities.

Melbourne recorded the biggest house price increase in 2010, up 8.4 per cent while Perth saw the biggest decline, down 2.3 per cent.

Commenting on the results, Rismark's managing director Christopher Joye pointed to a market slowdown in the second half of the year.

"The RBA's four interest rate hikes in 2010, which were topped up by a fifth via the banks, conspired to snuffle out capital growth during the remainder of the year," he said.

"Indeed, the capital city housing market very clearly peaked in May 2010, and remains below this point today."

First-time buyers struggling to get on the property ladder could choose to compare home loans in search of the best options. Among the index's other findings, it was shown that in "Rest of State" markets, which cover the 40 per cent of homes not located in the capitals, dwelling values rose by only 0.8 per cent during the whole of 2010.

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