australian interest rates to continue upwards on economy and housing surge
News Posted On: 08 December 2009
Australian interest rates continue to rise, and are forecast to continue doing so for the next 2 years, peaking in 2011.
The interest rates began three months ago, when house prices in Australia began to rise sharply sparking fears over the formation of a bubble.
House prices are continuing to rise, with almost every report you read quoting agents on bidding wars and properties selling at well over the asking price.
Earlier this year the International Monetary Fund said that Australian house prices were among the most overpriced in the world. And with reports of pretty average 3 bedroom houses in Melbourne selling for well over a million Australian dollars it seems that people are pretty happy to pay (what the IMF calls) over-inflated prices.
The Australian housing market is doing so well, because of stimulatory measures introduced earlier in the year, to stave off an economic crisis that never really hit Australia's economy as hard as it was feared.
The median forecast is for a growth of between 1.5% and 2% in the Australian economy this year, rising to 2.5% next year and 3.5% next year, which is why analysts are predicting that the banks will continue to push up interest rates in the country.
Last week the Central Bank revealed a further 25 basis points rise in the key interest rate, this, the third consecutive monthly rise from the Royal Bank of Australia. Since RBA began putting the key interest rate up, several banks have followed their advice and put their rates up even higher than the key rate.
This is not good news for homeowners, but it is good news for Australia as a whole, because it shows faith that the economy is robust, which increases investor confidence, and can only lead to rising foreign direct investment.
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