Property investors back after rate rise

AAP

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EAGER investors who have been sitting on the sidelines waiting for first home buyer activity to subside are rubbing their hands with glee that interest rates have started to go up.

Many have been forced out of the market by first home buyers with government cash hand-outs, which resulted in house prices going up.

But higher interest rates and the phasing down of the first home owner's grant boost will have a limiting effect on how much first home buyers can afford to pay.

Savvy investors and a second wave of first home buyers are waiting for prices to stabilise or even fall before they pounce.

But most pundits believe the relatively small interest rate rise will have minimal impact on house prices.

Ray White chairman Brian White said a small rise in official interest rates should not hurt the recovering housing market.

“This 0.25% rate rise was expected. It was just a matter of when, and people will anticipate rates will return to more traditional levels,” he said.

“I think we can afford a couple of interest rate rises and the confidence in the economy and the real estate market will over-ride any concerns about where rates are headed.

“There's no reason why this highly active market shouldn't continue and the cash rate is still only 3.25%.”

It's also highly unlikely that anyone will lose their home because they have to pay an extra $46 a month (on a $300,000 loan).

The ANZ bank expects four more interest rate rises to take the cash rate from its current 3.25% to 4.25% by next March.