News of another rate rise by the Reserve Bank of Australia, moving the cash rate target to 0.85 percent, has dominated conversations around family dinner tables this week.
This is the largest hike Australian borrowers have seen in 22 years, and if we are to listen to the economists, it’s not over yet with predictions the rate could hit 2.5 percent by the end of next year.
While those on variable interest rates wait anxiously to see if and to what extent the big banks will pass on the rise, it is possible a borrower with a $500,000 loan balance could see monthly repayments rise by $652 a month by Christmas next year.
Many couples and families are understandably taking notice, and exploring their options. There are a number of measures that can be taken to manage mortgage debt such as making fortnightly repayments instead of monthly, using an offset account, committing to extra repayments if possible, paying principal and interest and talking to your bank about renegotiating your rate.
As always, you should seek professional advice before making any important financial decisions.
Despite the headwinds, it is important to remind ourselves that there is much to be optimistic about with the property market on the southern Sunshine Coast.
Employment is very strong, population growth is surging and the region is experiencing unprecedented infrastructure spending to take us to the 2032 Brisbane Olympics and beyond. These factors all have a positive influence on price growth despite what interest rates are doing, separating us from other markets such as Sydney and Melbourne.
Yes, we may see property values plateau for a period, but is that the end of the world?
Since the pandemic, prices have increased approximately 30% on average Australia-wide. In Pelican Waters, where a new world class marina precinct is underway, values have risen 48% in 12 months.
Almost everybody who has purchased during this period will enjoy excellent capital gain even if prices start to cool.
It is worth remembering that only a third of Australian households have mortgages and there are many on the Sunshine Coast who actually benefit from higher interest rates, most notably self-funded retirees who will receive a boost to their disposable incomes.
The ‘Grey Nomad’ phenomena of retirees selling their homes to top up their super and see the world is adding to supply.
The RBA’s response to surging inflation and cost of living pressures by raising interest rates was seen as inevitable.
The reality at Henzells is that sales volumes are tracking as strongly as ever. Buyers and sellers are more facts-oriented and cautious than they were a few months ago but are still proceeding with their plans.
At this rate, the outlook for the Sunshine Coast property market remains strong.