Australian Money Forum

[Miller]

AUSTRALIA'S love affair with property is likely to continue next year, however, higher interest rates will create a soft patch for the market in early 2007.

The Reserve Bank of Australia (RBA) lifted rates three times this year by 25-basis points each in May, August and November, bringing the official cash rate to 6.25 per cent, a six-year high.

The three rate moves were meant to curb underlying inflation which climbed to about 3 per cent this year.

As economic growth is expected to slow in 2007, and inflation is expected to abate, the RBA will have fewer reasons to raise rates again.

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