The Reserve Bank in Australia is certain to put the interest rates on hold for the first time since February, after its half a dozen near-consecutive rate increases have affected borrowing and real estate prices.
PR Data figures showed a 0.2-percent ”anaemic growth” in home prices in April, the first month since the depth of the global financial crisis two years ago that seasonally adjusted prices have increased by 0.5 percent.
Home prices in Melbourne had surged 18 percent in the year to April, and unit prices increased 19 percent.
Savanth Sebastian, an economist from CommSec, said the ”perfect storm” for the residential market was over. ”Interest rates are rising, the government has withdrawn some special grants, the supply of new homes is rising and housing finance has fallen to nine-year lows.”
Borrowing in the private sector also rose 0.2 percent in April, the slowest level of growth in five months.
Meanwhile, personal loans increased 0.2 percent and home loans rose 0.5 percent, while business loans dropped 0.4 percent.
Many property agents expect an increase in the number of properties available on the market in the next couple of weeks, as sellers try to get ahead of falling buyer confidence.
Meanwhile, the Real Estate Institute of Victoria is expecting 1,210 auction listings within two weeks, the highest record of auction listings so far this year.
”The six interest rate rises totalling 1.5 percentage points are impacting the market,” said Enzo Raimondo, chief of REIV. ”Higher stock levels will provide buyers with more opportunity and reduce pressure on prices.”
Rory Robertson, an economist from Macquarie group, said he considered the Reserve Bank certain to leave interest rates ”on hold”, having succeeded in returning most interest rates to around their average levels.