Market Report Interest Rates have been on hold since last November 2010, yet after Wayne Swann delivered Australias budget on the 10th of May

Interest Rates have been on hold since last November 2010, yet after Wayne Swann delivered Australia’s budget on the 10^thof May, it appears that our economy is still moving along at a steady pace. Unemployment is still on the decline and expected to drop to around 4.5% within the next 12 months.

A strong labour market is expected to put pressure on wages which will then most certainly put pressure on interest rates. Most leading banks and economists believe interest rates will rise by a further 1% in the next 12 months.

The real estate market in Sydney has a habit of being able to adjust to variable interest rates, yet sustained increases in rates will have an effect on consumer confidence and more importantly will affect the affordability of property.

Many experts throughout the Western world believe property values in Australia are inflated. Whilst this could be true, there is a massive pent up demand for buyers and renters wanting to live in our capital cities and this is consistently putting pressure on availability and prices.

There are still many suburbs in Sydney’s South-East which are growing in value. Suburbs such as Maroubra up in excess of 25%, Eastlakes, Mascot, Botany, Matraville, Hillsdale, Eastgardens and Rosebery are still on the up and up and in the past 12 months Zetland grew by over 30%.

As the economy continues to grow it is expected that interest rates are to increase. Australia has experienced 19 years of consecutive economic growth and is one of the few economies which avoided a recession in light of the Global Financial Crisis. Therefore, there is much to be positive about, including a mining boom that goes from strength to strength and an overall very strong property market which is underpinning our economy as a whole.