Interest rates November 2023: What it means for Gold Coast property market

A decision has been made which will prove devastating to the Gold Coast’s property industry and those struggling to make ends meet. HOW IT AFFECTS YOU

A Melbourne Cup day interest rates rise will deliver another blow to borrowers looking to buy property on the Gold Coast, real estate figures have warned.

The Reserve Bank of Australia (RBA) board on Tuesday lifted the cash rate by 0.25 per cent. basis points to 4.35 per cent on the back of a surprise rise in inflation brought about by surging housing spending.

It was the first interest rates increase by the RBA since June

The month-to-month inflation rate rose to 5.7 per cent in 12 months to September.

New bank governor Michele Bullock, presiding over her second meeting, said the decision was not taken lightly.

Governor of the Reserve Bank of Australia Michele Bullock. Picture: NCA NewsWire / Martin Ollman

“Inflation in Australia has passed its peak but is still too high and is proving more persistent than expected a few months ago,” she said.

“The latest reading on CPI inflation indicates that while goods price inflation has eased further, the prices of many services are continuing to rise briskly.

“While the economy is experiencing a period of below-trend growth, it has been stronger than expected over the first half of the year. Underlying inflation was higher than expected at the time of the August forecasts, including across a broad range of services.

“Conditions in the labour market have eased but they remain tight. Housing prices are continuing to rise across the country.

“At the same time, high inflation is weighing on people’s real incomes and household consumption growth is weak, as is dwelling investment.”

It another blow for 30,000 Gold Coasters experiencing mortgage stress – a jump of 10,000 people than May 2022 – and developers who have faced troubled water.

Ray White Surfers Paradise boss Andrew Bell said the rates rise was not the only factor to consider when looking at the impact of interest rates rises on the economy.

“No surprises with this interest rates rise because it has been well trumpeted for several weeks but as an attempt to curb inflation, the RBA has done so by also damaging the economy,” he said.

Ray White Surfers Paradise Group chairman Andrew Bell. Picture: Celeste Humphrey/novasoma photography

“While real estate is not in any way immune to interest rates rises, it certainly does impact on our markets and the aspect to watch carefully now will be employment numbers.

“If unemployment starts to rise, this will impact the real estate market with increasing number of people having to sell.

“The real test for which straw breaks the camel’s back in terms of interest rates rises will be evident as we move in 2024.”

The Gold Coast’s construction sector has slowed dramatically as interest rates rose, struggling against high material costs and supply shortages.

These challenges have seen the demise of several developers and construction companies, including Condev and GCB Construction.

Other developers are now moving to shore up projects by becoming their own in-house builders.

Colliers Gold Coast director Steven King.

Steven King, director in charge of Colliers Gold Coast, said it was critical to bring inflation under control in the long-run.

“While it’s not ideal for the property market to see rates rise again it’s obvious that inflation remains stubbornly high,” he said.

“Bringing inflation under control will ease household costs so it’s an important measure in the long term that this is the RBA’s primary objective.

“One sector that will be happy about rising rates are retirees and those looking to downsize from houses into smaller homes, freeing up equity that can boost bank accounts and take advantage of higher bank interest rates.”