House price growth in major cities is still slow.

After much deliberation, the Reserve Bank of Australia has decided to keep the interest rates steady. However, there are concerns that this may lead to a lag in property price growth in the nation's two major cities.

It is predicted that the housing market will remain vulnerable, especially with the possibility of a rate hike in the near future. Real estate investment company Ekam Capital warns that with the current economic climate, there is a slim chance of a rate cut until next year.

Chief strategist Robert Baharian explains, "We're already witnessing a slowdown in house price growth, particularly in Sydney and Melbourne. The high levels of debt and cost of living are putting a strain on households." He also adds that the situation may be worse in some capital cities compared to others due to a potential rise in unemployment in the latter half of the year.

However, there is some hope for cities like Brisbane and Perth, as their property prices are expected to remain relatively stable. "Given the value for money in these cities, we anticipate a growing number of investors shifting their focus away from Melbourne and towards these areas," says Baharian.

While the RBA continues to monitor the country's inflation rate, which currently stands at 3.6%, Governor Michele Bullock states that they are open to all possibilities and that the economic landscape is proving to be quite unpredictable.

In light of this, Baharian believes that the longer the interest rates remain stagnant, the longer it will take for house buyers to feel any relief. "We predict that rates will stay the same until at least September, and possibly all the way until April 2025, before consumers see any improvement," he explains.

Despite the current victory in keeping inflation at bay, Baharian reminds us that the war is far from over. "We may have won this battle, but we still have a long way to go before we can declare victory in the fight against inflation," he says.

It is worth noting that the current interest rate has remained unchanged since November 2023. However, the financial market is anticipating a cut in the next move by the RBA, rather than an increase. Only time will tell how this situation will unfold, and we can only hope for the best.

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