Is the Rental Market Starting to Stabilise? Will house prices fall 15%-25% after the first of RBA hikes?
The REIQ September 2021 Vacancy Report shows minimal movements up or down in most areas. The Sunshine Coast noted a vacancy rate of 0.6% remaining static.
REIQ CEO Antonia Mercorella said “Declines in vacancy rates may have stabilised overall, but owner-occupiers were still active in the market and buying up residential property. This puts owner-occupiers in competition with potential investors in the property market. In addition, some investors are taking advantage of high capital growth and making a decision to sell their existing properties, which is exacerbating the limited supply of rentals.”
The latest ABS data indicated investors were increasingly active in the market. “More investors in the market should increase the number of properties in the rental pool and begin driving up vacancy rates, relieving stress on renters.. I’m hopeful that recent moves by the Australian Prudential Regulation Authority (APRA) to tighten home lending conditions doesn’t dampen investor activity in the market.”
She also added that It remains to be seen what the impact of the State Government’s new rental reform legislation will have on the appeal of investing and consumer confidence.
Australians hoping to buy property will be forced to prove they can repay their mortgage if rates rise 3 per cent, under new rules that came into place on the first of November. The Australian Prudential Regulation Authority (APRA) announced the higher stress test increasing the test from 2.5 per cent to 3 per cent. That means banks will need to check whether borrowers can manage repayments if interest rates increase by 3 per cent, or that they can meet the bank’s own serviceability floor if that is higher. According to APRA, the restrictions will reduce borrowers’ maximum borrowing capacity by around 5 per cent.
Financial review Columnist Christopher Joye predicts house prices to fall 15%-25% after the first 100bps of RBA hikes. He writes that the normalisation of Australian inflation, and the Reserve Bank of Australia’s cash rate with it, is a game changer for everything: equities; bonds; house prices; and portfolio construction. Everyone needs to go back to first principles and re-evaluate their decisioning juxtaposed against a world in which short and long-term interest rates could be a lot higher.
Are these signs of a change ahead in the property market/ Rest assured Williamson & Co. will continue to keep you up to date with the latest in Real Estate News.
SOURCEhttps://au.finance.yahoo.com/news/mortgage-borrowing-rules-3-002536643.html?guccounter=1
