Interest rates rise again

The Reserve Bank of Australia (RBA) announced this afternoon (June 6) at 2.30pm that interest rates would rise 0.25% from 3.85% to 4.10%.  The RBA cited a rebound in Australian inflation and the recent wage rises for minimum and award wage earners. This takes the total rate rises to 4.00% since May 2022.

Did we expect this rate rise? It was a very mixed forecast by economists and financial markets, CBA and Westpac, for example, predicted another pause for the RBA to observe how the market was absorbing the torrent of rate rises already delivered. However, ANZ had predicted the rate rise today and further believes rates will rise another one more time before reaching their peak at 4.35%.

The weekend just past saw another solid result for real estate auctions and clearance rates, so maybe this was playing on the RBA’s mind as well. A great local example is the sale of 11A The Drive, Stanwell Park last week for $1,750,000. The property was purchased in June 2020 for $1,150,000. That’s growth of 52% over less than two years!

The rate rises are not expected to cause a recession and the property market continues to suffer from lack of stock. So overall this rise may not impact the real estate prices too much. The June long weekend coming up will be an interesting test to see how buyers react.

About the author

Ian Pepper has had a long and distinguished career as a finance and real estate professional. Originally trained as a Chartered Accountant in 1995, Ian worked in Sydney and London. He has an MBA from Macquarie Graduate School of Management and now sells real estate with Ray White Helensburgh. Ian also volunteers with local community groups including school P&Cs, sporting clubs and business chambers.

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