The Reserve Bank’s November rate hike had a negative impact on housing affordability, recent research has found.
According to RP Data’s latest Rismark Hedonic Home Value Index, the interest rate hike also caused home values to slump in the second last month of 2010.
Home prices in Australia’s capital cities sunk by 0.2 per cent in November 2010, making home values lower now than the levels reached in March 2010.
RP Data’s director of Research Tim Lawless said the RBA’s decision to lift the official cash rate was one of the key drivers of the soft landing in Australia’s housing market.
“Since their peak in May 2010, capital city home values have fallen by 1.0 per cent in raw terms on the back of interest rate hikes,” he said.
“If for some unlikely reason the RBA does not raise rates further still, we would expect to see national dwelling prices stabilise over 2011 and grind out capital gains in excess of headline inflation, which we anticipate will breach 3 per cent by the end of the year.”