House prices are expected to rise as much as 10% this year after a 16% increase for the past two years as property investors took advantage of the low interest rates, according to HSBC Australia Economist Paul Bloxham. This prediction is in line with RP Data’s capital price data for July, showing property prices up by 1.6%.
Mr. Bloxham adds that there is an imminent need to increase the interest rates for 2015 to prevent a property bubble in certain areas, particularly Sydney. Although the low interest rates have been favourable to the economy as it provided a much needed boost to the residential construction sector to offset the slowdown of the mining sector, the risk continues to grow for unsustainable house prices.
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