Australia home prices seen rising 10% on rate cuts

Interest Rates

Interest Rates (Photo credit: 401(K) 2013)


Australia’s flagging property market is poised to get a boost from record low interest rates and a housing shortage that could boost prices by as much as 10 per cent this year. The Reserve Bank of Australia has cut the cash rate by 1.75 percentage points since November 2011 to match a 50-year low, which has helped reduce standard variable mortgage costs to 6.65 per cent in November, the lowest in almost two years, central bank data show.

Traders are betting on a 49 per cent chance the central bank will drop the rate a quarter point to 2.75 per cent by March, interest-rate swap prices compiled by Bloomberg show. While lower borrowing costs failed to stimulate demand in 2012, additional rate cuts and a constrained supply of homes will draw buyers back to the market, said Janu Chan, a Sydney-based economist at St George Bank Ltd.

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One thought on “Australia home prices seen rising 10% on rate cuts

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