Higher interest rates not so bad

EVERYONE wants a strong economy, but the spate of rising interest rates is dreaded by most property owners. It's not just the increase in mortgage repayments that is loathed, as higher interest rates, we're told, lead to house prices taking a tumble. But is this true?

Looking at the track record, the answer is not as clear as you might expect. It's true that residential property prices stopped growing during the last interest rate peak, but a worldwide financial calamity also peaked during the 2008 spring market, when 40 per cent of Australia's property transactions take place. Interest rates rose three times in the year before, yet prices in three cities -- Brisbane, Adelaide and Melbourne -- rose more than 20 per cent.

For more on this article go to The Australian