Australian Property Prices continue to rise

Australian Dollar Rate Outlook

MELBOURNE'S property spree looks set to continue despite the looming threat of an interest rate rise.

Economists tip the Reserve Bank of Australia board will make history when it meets tomorrow by increasing official rates for the third month running. A 0.25 percentage point increase would bring the cash rate to 3.75 per cent, adding $45 a month to repayments on the average Australian mortgage of $300,000. There were more than 1000 auctions at the weekend, and about 2500 more are scheduled in the three remaining weeks before Christmas. The flood of stock trimmed Melbourne's auction clearance rate from its recent levels of 80 per cent to 78 per cent. Results were still solid despite heavy rain yesterday morning.

"Nothing's dampening the market at the moment," said Hocking Stuart Richmond director Chris Murphy. Yesterday afternoon Mr Murphy sold a Victorian terrace in Cubitt St, Richmond, for $756,000 - well above the advertised selling range of between $620,000 and $680,000. "We've sold nine out of 10 in Richmond this weekend," Mr Murphy said. A rise in interest rates would do little to cool the red-hot market, he said.

If the RBA decides on an increase to 3.75 per cent the official cash rate would still be lower than it has been for the past 20 years, excluding the global financial crisis. "We're coming off such a low base I don't think it will make a difference," Mr Murphy said. "If anyone's got any cash left after the GFC they're out and about bidding."

Real Estate Institute of Victoria's Robert Larocca said a lift in interest rates would be unlikely to shift the market until next year.

"If you're in the market at the moment you're committed and unlikely to change your course," he said.

Would-be homebuyers were aware that interest rates are on the way up and were already pricing in further rate increases. He said rates couldn't remain at emergency lows indefinitely.

To read more please visit www.news.com.au

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Bye For Now

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