The areas most vulnerable to RBA changes


"There is not much action [price of houses] after the first two quarters, but from about a year to almost two years after the change in the liquidity rate the most expensive areas have the deepest response to monetary policy", said RBA researcher Calvin He.


"The effect reaches about six quarters after the shock and stands at 1.25%. If the home of the median group responds by 3%, these groups will respond by about 4.25%. That's enough significant."

For a property valued at $ 2 million in Vaucluse in Sydney or Toorak in Melbourne, the decline is equivalent to $ 25,000 in response to a 100 basis point interest rate change.

Mr. He did not name the different suburbs, but areas near the east coast of Sydney or the city center of Melbourne were more sensitive.

"It appears that monetary policy temporarily changes the distribution of housing value," he said.

"An increase in the liquidity rate will lead to greater decreases in the more expensive areas and vice versa: the effect is only temporary, it is only there for one to two years".

Mr. He said that it seemed that the ability to invest was a factor, with those highly indebted and more susceptible to exchange rate changes.

"More families on hand in a region, less susceptible to changes in the liquidity rate," he said.

Mr Ha found that the greater the number of people earning between $ 1 to $ 500 a week, the less the area, equivalent to the size of a local council, responded to changes in interest rates. The same phenomenon occurred if the property was more focused on the land and if there were more people with government benefits.

There were also differences between states, with Western Australia much more sensitive to changes in interest rates than the NSW as a whole. Mr. Non commented on Victoria.

The research follows the release of figures from the Australian Bureau of Statistics on Friday, according to which the proportion of Australians owning their homes has fallen to a record low of 30%.

The low level of interest rates combined with the rise in house prices in the last decade has led Australians to hold more debts than they perceive for the first time. The record numbers of families fighting against large mortgages have pushed the ratio of debt to average income to 110%, or $ 1.10 in debt for every dollar of income.

The report is likely to make these families more vulnerable to changes in interest rates in the future.

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