Rate hikes, more than tax changes, are putting pressure on house prices, says PropTrack | ABC NEWS

By ABC News (Australia)

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Auction clearance rates remained soft at the weekend, with preliminary figures from REA Group showing markets tipping in favour of buyers. But are prices heading lower as a result of the impact of changes to property taxes for investors or rate hikes? Senior economist from REA Group's PropTrack, Angus Moore says interest rate hikes have clearly put downward pressure on home prices in Sydney and Melbourne. However, he says what's keeping house prices strong for the rest of the country is supply remains constrained. He says there's not enough data yet to see how changes in the federal budget to negative gearing and the capital gains tax discount have impacted house prices, but PropTrack's estimates show it will probably have a modest impact in the order of one to five per cent over the longer term. "We'd expect that to push some investor demand into the new homes market and so how that change in the established market flows through will be a really interesting thing to watch," he says.

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