The biggest one-month spike in property values ​​in 17 years and a surge in new home loans have led to warnings in the property market of overheating and could force the reserve bank to reassess record-low interest rates

Some economists believe the RBA, which meets on Tuesday, may have to start rate hikes as early as next year to cope with house prices, which have soared 3 percent in Sydney and 2 percent in 5 percent in Melbourne in the last month

Home values ​​soared to their highest level in 17 years in February, and home loans soar in response to extremely low interest rates and government support programsCredit: Paul Rovere

CoreLogic reported that the median house price in Sydney was $ 1061It hit $ 229, up 48 percent over the past three months, while in Melbourne it rose 42 percent to 829$ 509

Prices Rise Across Country In regional Tasmania, house prices have risen 138 percent over the past year, and house values ​​in Canberra, Hobart and Darwin have soared more than 10 percent over the same period despite the deepest recession since the 1930s / p>

Nationally, prices rose by 21 percent in the four weeks of February – the biggest single monthly jump since August 2003 – supported by extremely low interest rates and COVID-19 support programs from the federal and state governments

Separate figures from the Australian Bureau of Statistics, released Monday, show that potential home buyers are increasingly willing to take on more debt to break into the housing market

Home loans rose 105 percent in January to 44 percent higher than a year ago Loans without refinancing rose 110 percent in Western Australia, 74 percent in Queensland and 39 percent in Victoria last year
First-time home buyer loans rose 101 percent to 73 percent in the past 12 months.More than half of all loans sold in WA in January were given to first-time buyers, while in Victoria 46 percent were new to the market

Owner-occupiers are now battling investors who have re-entered the market Investment property loans are up 9.4 percent

It’s not just about strengthening the real estate market. ANZ’s monthly job advertisement count rose 72 percent in February after climbing 26 percent in January and is now 13 percent up 4 percent in the past 12 months, its highest level since October Achieved in 2018

The RBA has signaled that it does not expect to hike official interest rates from 0.1 percent before 2024

But among the economists who took part in The Sydney Morning Herald / The Age Scope survey, two believe there could be a rate hike as early as late 2022, Neville Norman, a professor at the University of Melbourne, predicts a rise in the fourth Quarter and Rebecca Cassells of the Bankwest Curtin Economics Center predicts a third quarter. Another three believe interest rates could rise in 2023

Shane Oliver, chief economist at AMP Capital, said several factors are driving the real estate market, including government incentives, freeing up pent-up demand, eliminating responsible lending obligations and the “fear of missing out.”

He said prices could rise another 5 to 10 percent, which the RBA would be concerned about

“The acceleration in real estate prices is likely to worry the RBA – but with average prices barely surpassing their 2017 high, real estate debt growth remains relatively subdued at 3.6 percent year-on-year and there are currently few signs of a significant deterioration in lending standards.” It is unlikely that APRA (the Australian regulator) will reach for macroprudential leverage right now, ”he said

Westpac chief economist Bill Evans said low interest rates would remain part of the economic landscape for a long time to come

“RBA guidelines are required to remain stimulant for a number of years Macroprudential policies to address harmful asset bubbles should be applied when necessary to achieve a “soft landing” in markets rather than the sharp deterioration we saw in 2017-19, “he said

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Jennifer Duke is a business correspondent for The Sydney Morning Herald and The Age at Parliament House in Canberra


World News – AU – Rising house prices could force the RBA to reassess extremely low interest rates, economists warn