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Home Loan Limits on the Horizon

By Kevin Kelly

Worried that low-tax super accounts are partly responsible for property speculation, the Reserve Bank of Australia has promised to keep a watchful eye on banks' lending standards.

Those interested in real estate in Australind may want to stay abreast of developments in the housing market, as it could be prudent to make a move sooner rather than later.  

The Reserve Bank's concern acts as an admission that the record low 2.5 per cent cash rate has caused the looming danger of a housing bubble. Australian home prices face an astounding 20 per cent increase, according to SQM research, and Sydney has first place in this race driven by low supply and high demand.

Highly regarded SQM Research property analyst Louis Christopher commented that if the economy continues in the current upward direction, national house prices may see an increase of 15 to 20 per cent in 2014, with Perth seeing a 8 per cent increase.

The average home prices for capital cities across Australia will likely rise by 11 per cent in 2014, projects SQM.

If the predicted situation comes to pass, the Reserve Bank will find themselves with a conundrum regarding interest rates, especially if just a few cities experience growth and levels of unemployment stay high.

If the market manages to recover swiftly enough, many of these concerns will be abated. For now, it's important that those involved in Bunbury property management keep a close watch on the market and the Reserve Bank's activities.

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