Mark is big on ideas, short on time, so he and I had a quick-fire chat to hear what he had to say about what’s going on with interest rates and the housing market in 2022.
Matt: Hi, Mark, great to catch up. In just one or two sentences, can you tell me how the Australian economy is looking at the moment?
Mark: It’s actually looking pretty good. We currently have low unemployment and low inflation – and both of these have happened earlier than was expected, but inflation seems to be on the way up.
Matt: And what do you think we can expect for interest rates this year?
Mark: It’s looking likely that rates are set to rise in late 2022 or early 2023 – but by how much, and when, is the million-dollar question.
Matt: And why are interest rates so important to Australians?
Mark: Because they can affect mortgage interest rates and consequently house prices – and we’re hugely preoccupied with house prices in Australia.
Matt: And how’s the housing market looking at the moment?
Mark: It’s good. We had a big spike at the start of 2021 and, although prices might not be rising quite as much now, it’s still looking pretty healthy.
Matt: Have you noticed any differences in buyer behaviour lately?
Mark: Yes – a few months ago, people were happy to offer much higher prices for a house, but now buyers are setting limits on how much they’re willing to spend, and they won’t go over that.
Matt: And when interest rates do eventually go up, what do you think will happen to house prices?
Mark: There’ll likely be a drop – which is just down to supply and demand. Supply will increase, but demand will drop, so prices will drop, too.
Matt: Some are predicting a double-digit fall in certain areas in 2023 – what do you think about that?
Mark: It all depends on the number of interest rate rises we see this year – and that’s up to the Reserve Bank.
Matt: So it’s a case of waiting and seeing, I guess.
Mark: That’s right. And we should remember that lenders don’t just follow the cash rate, either, they set their own rates, so they can raise their rates at any time.
Matt: You’ve previously said that young people shouldn’t just rush to get on the housing ladder. Even if rates rise and prices tank, would you stand by that view?
Mark: Sure. I’m not talking about wasting all their money on silly things. I’m just saying that for the average young person, it’s pretty hard to get the deposit together for a house with the prices the way they are now. So it might be better to rent a place – cheaper – and save your money, invest it, or put it into a business. Grow the deposit another way. I just don’t think it’s the be-all and end-all for young people.
Matt: It’s been a pleasure. Thanks, Mark.
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