Perth, WA -- (SBWIRE) -- 10/22/2014 -- A combination of record low interest rates and strong investor demand have seen significant growth in capital cities.
Sydney and Melbourne experienced strong growth over the last year with 16.2% and 11.7% increases respectively. Other cities including Perth saw strong growth but nowhere near what these two capital cities experienced. These figures have caused the RBA to issue stern warnings that steps would need to be taken to cool the property market.
One suggestion included implementing more strict lending criteria to property investors and to increase the deposit amount required. Increasing the interest rates is also another possibility in an attempt to make housing prices more sustainable. Changes to the cash rate are not expect for quite some time.
It appears that some of these warnings have had some impact.
A number of property agents throughout the country have already been reporting declining numbers and less bidding pressure at property auctions. The Perth property market has also continued to slow down with a large increase in the number of homes available for rent.
Figures from the Real Estate Institute of WA (REIWA) indicate a 50% increase in the number of properties for rent just in the last year alone. REIWA president David Airey indicated that home sales had been on a steady decline for the past 18 months.
He said, "We've got fewer sales being made, but strangely the median price is holding up to be pretty steady around the $540,000 mark." Airey also noted that despite this, the overall market is still strong.
The RBA continues to keep the cash rate at 2.5%. Economists do not expect any changes to these rates until the end of the year at which point it may see an increase although it is impossible to know for sure.
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