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MELBOURNE - Any hopes of a recovery in the Australian housing market are unlikely to be fulfilled as buyers begin to feel the burden of recent interest rate hikes, a report says.
A report from Macquarie Research says recent housing and investor finance data suggest home buyers and investors are feeling the heat of higher interest rates, after three hikes last year.
"This is reflected in a sharp jump in fixed-rate borrowing and a fall in lending to first-home buyers," analyst Brian Redican says in the report.
"In our view, this suggests that any hopes of a housing recovery in 2007 are unlikely to be fulfilled."
Mr Redican also said jitters the Reserve Bank of Australia would put rates up again next month were also taking their toll on investors.
"Whilst the three interest rate rises in 2006 are unlikely to decrease demand for owner-occupied housing and therefore push up rents, investors will be a bit weary about entering a market with uncertain house prices," he said.
"Investors are also highly sensitive to the possibility of another interest rate rise."
Potential first home buyers also have reservations about entering the market with housing affordability falling to its lowest level since December 2003.
Also, with the number of loans approved for the purchase of new dwellings falling for the sixth consecutive time, Mr Redican said the trend in building approvals may also be about to enter a downward spiral.
- AAP
