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Market Update

A small rise in official interest rates shouldn’t hurt the recovering housing market, according to Ray White.

Ray White Joint Chairman Brian White said the RBA had made it clear the near record-low interest rates of 3.0 per cent had been an emergency measure during the global financial crisis and they were bound to go up again.

Mr White said the fact the Australian economy was among the best performers in the world had given consumers a great deal of confidence and this had flowed on to the housing market, which was in good shape nationwide and likely to stay buoyant.

“This 0.25 per cent rate rise was expected, it was just a matter of when, and people will anticipate rates will return to more traditional levels,” he said.

“I think we can afford a couple of interest rate rises and the confidence in the economy and the real estate market will override any concerns about where rates are headed.”

Mr White said spring had already seen strong residential real estate sales nationwide and auction clearance rates in some suburban Sydney markets had been at over 90 per cent in recent weekends.

“There has also been strong activity in other capital cities and Ray White in Victoria has just reported its strongest monthly sales result in history with three Melbourne offices recording sales in excess of $20 million,” he said.

“There’s no reason why this highly active market shouldn’t continue and the cash rate is still only 3.25 per cent.”

Mr White said the first home buyers cashing in on the boosted grant scheme had driven the property market during the first half of 2009 but now people upgrading their homes and property investors were more active.

“The one thing these people share is growing confidence about the Australian economy and the direction we are heading,” he said.