Will Property Values Go Down with Rising Interest Rates ?

With what's going with the media right now, 90% of the investors would think property market would either crash or go down as some of the fixed rates have gone up. If we analyse the historical data and stats, numbers would never Lie!

Reserve bank's cash rate has been at 0.10% for the last 12 months since 4th of november 2020. Let's have a look at the cash rate rises and the house price movements since 1994 :

In 1994, cash rate has increased to 2.75% and during this 6 month period, House prices have still increased by 1.1%

In 1999, cash rate has been 1.5% and during the 1 year period, house prices have increased by 7.5%

In 2006, cash rate has been 0.75% and during this 6 month period, house prices have gone up by 8.4%

In 2007, cash rate has been 1.00% and during this period, house price increase has been 8.9%

In 2009/10, cash rate has been 1.75% and during this period, house prices increase has been 10.5%

History suggest that, just becuase the cash rate goes up, it will not have a direct impact to housing values as long as the fundementals are strong!

Each state and city has its own property cycles and the below table depicts house price index in each major city during certain times and it does a comparison against the cash rate

Historical data tells us, that cash rate does not have a direct corelation to the property market, but there are number of other fundemental factors such as population growth, infastructure developments and employment growth which will really define the growth or a decline of a property market.

Please feel free to contact us for any property investment advice in Australia and we are more than happy to help.