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Low interest rates could push up property prices by as much as 30 per cent.

1Mo ago 0 Replies 24 Views
An internal RBA document, made public on Friday, has predicted a 30 per cent growth in property prices over a period of three years if interest rates remain persistently low.
According to the RBA’s data mapping, a permanent 1 percentage point (100 basis point reduction) cut in the official rate could increase real housing prices by 30 per cent after about three years.

According to leading indicators, Australia’s property boom has already kicked off, with double-digit growth already logged across the country.

“First home buyer activity has increased strongly in recent months, a positive indication of access to housing for younger households, according to loan commitments data,” the RBA added.
It, however, cautioned that increasing asset prices can induce borrowers to take on too much credit if accompanied by looser lending standards and/or optimistic assessments of risks.

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