What an interest rates hike means for Queensland’s property market

Uncertainty generated around interest rates spikes could completely shift the South East Queensland property market, with one particular market expected to thrive.

Uncertainty generated around the looming interest rates spike could swing the South East Queensland property market towards a buyer’s domain, property experts have predicted.

The Reserve Bank met on Tuesday and increased interest rates by 0.5 per cent, which will put a squeeze on household spending.

On top of growing grocery bills from high inflation, experts say it will put more pressure on family budgets and lead to credit-card debt and more buy-now, pay-later schemes.

Property experts have weighed in on how the jump could affect property values throughout the South East and regional Queensland.

Ray White Group’s chief economist Nerida Conisbee said the 2022 market was not as “red hot” as in 2021 and that rising interest rates would “calm” it further.

Ray White chief economist Nerida Conisbee said an interest rate spike would calm SEQ property markets. Picture: Tertius Pickard

Ms Conisbee said rising construction costs for new homes, international borders reopening, the continuing rental crisis and booming population growth had helped maintain demand for properties.

She said it was uncertain whether property prices would fall.

“Interest rates have had a calming effect on the market,” Ms Conisbee said

“And some median prices in Brisbane did drop off slightly in May, but no substantial decline.

“But any further increases will moderate the market. People as a result will choose to borrow less or be forced to borrow less.”

Ms Conisbee predicted the market would continue to slow for much of 2022 and swing from a seller’s market to a buyer’s.

“Particularly for the Sunshine and Gold Coasts, we aren’t seeing the same level of interstate buyers,” she said. “The locals are rushing back in.

“They’re enjoying the change. Last year was a very stressful time to be a buyer.”

Ms Conisbee said more regional markets in Townsville, Cairns and Rockhampton were unlikely to be as driven by interest rates because they relied more on local economy and population growth.

Property experts have weighed in on what a rise in interest rates would do to Queensland property markets, with the city’s apartment market expected to thrive towards the end of the year. Picture: Brendan Radke

Colliers International residential director Andrew Roubicek said SEQ properties were “well-insulated” by a massive under-supply for apartments, houses and land to handle an interest rates spike.

But he said it would create uncertainty for some demographics.

“When you have all this demand, and no supply, it should cushion any impact interest rates have,” Mr Roubicek said.

“There will be a bit of a shock for the younger audiences who haven’t seen a rates increase before; it will create uncertainty.

“But the strengths in the market far outweigh any negatives.”

Mr Roubicek pointed to the gulf in price difference between Brisbane houses and apartments, which was the greatest differential in 20 years, having reached 49 per cent.

He tipped the city’s apartment market would thrive towards the end of this year.

“You have a whole bunch of buyers in Brisbane who will be physically unable to meet repayments for a house, but they can afford apartments,” he said.

“Mortgage repayments on an apartment have a much better buffer than houses.

“There will be much more demand for established apartments. That’s the new norm.”

Originally published as What an interest rates hike means for Queensland’s property market