Last November's interest rate rise may have been the last for some time and house prices are will stabilise, a leading economist told the Mortgage & Finance Association's (MFAA) Economic Outlook in Sydney this week.
Dr Chris Caton, Chief Economist at BT Funds Management, said NSW has borne the brunt of the weak housing market, due to over-valued properties and an underperforming economy compared to the national standard.
But according to Dr Caton, the adverse effects of two droughts, a post-Olympic 'hangover' and industrial competition from booming states such as Western Australia, should wear off and see the market bounce back slowly.
MFAA Chief Executive, Phil Naylor, said Dr Caton's forecast is positive for investors and first homebuyers.
"With rents soaring and house prices in most states stabilising, this is an opportune time for those thinking of entering the market or buying an investment property.
"However while Dr Caton's forecast of stable interest rates promises more buying confidence, our members are not seeing increased investor interest in property as yet."
Although Dr Caton does not believe the Reserve Bank will push interest rates up any time soon, he suggested any movement would be upward rather than down as a drop in rates generally only occurs during weak economic times.
