Property watch: Century 21's Charles Tarby on interest rates, 27 Hewison Street, Tighes Hill and 141 Gordon Avenue, Hamilton South.

First home buyers need to weigh up whether they can service their home loans as interest rates start to climb, one of the country’s leading agents has warned. 

It comes after all four big banks announced they would raise interest rates, independently of the Reserve Bank. Many smaller lenders, including Newcastle Permanent, are following suit. 

There could be pressure for further hikes if the Reserve Bank lifts the official cash rate from its current record low of 1.5 per cent. 

CEO of Century 21 Australasia Charles Tarby said rising rates could have the positive effect of cooling an overheated real estate market, especially in Sydney and Melbourne. But he said young people – who had never witnessed the heights of interest rates in the early 1990s – needed to be prepared if an era of historically low rates came to an end. 

“If you’re accustomed to paying an interest rate of four per cent and it goes up to five, which is very possible, that’s a 25 per cent increase in your repayment. 

“I don’t think people have factored that in. I don’t think people understand how potentially easily rates can rise.” 

But Mr Tarby said higher rates could bring some needed relief to the “upward movement” of overheated markets around the country. 

“I know this sounds a bit odd coming from a real estate agent but that is not what our economy needs right now,” he said. 

“A boom market is a massive disruption to a real estate cycle, and in certain locations it has been brought about by the reduction of interest rates because of economic issues.” 

But he challenged the mounting calls for negative gearing to be abolished. 

“Realistically only Sydney and Melbourne are producing these massive results and some other markets are struggling,” he said. 

“My greatest concern is if you remove negative gearing, what impact is that going to have on the rest of the country, places like Western Australia?” 

He said prices in Sydney were “clearly a supply issue” and the result of “dysfunctional arrangements” between councils and state governments, tying up land. 

TIGHES HILL IN DEMAND

The rush on Tighes Hill is showing no signs of slowing, with over 170 inquiries in 10 days for an architect-designed home listed by Villager Property. 

Stephen Gray of Liquid Architecture was behind the 2015 transformation of the traditional weatherboard cottage at 27 Hewison Street, which boasts five bedrooms with built-ins. 

The owners opted for a modern, cube-shaped extension at the back of the home, retaining the charming cottage facade at street level. A similar approach was taken by owners in Maryville who recently sold for $1.175 million. 

“Renovators are incorporating the old and the new,” agent Rodney Roewekamp said. “It’s very hard to replicate the look of that historic era through today’s building materials so people are going for the complete opposite effect.” 

The home will go under the hammer on April 23. 

“It’s a big house for Tighes Hill and it’s very functional,” he said. 

‘MUCH ADMIRED’ DISPLAY HOME TO BECOME MEDICAL PRACTICE

The miserable conditions broke to a beautiful Autumn morning as a “much admired” property at 141 Gordon Avenue in Hamilton South went under the hammer. 

Domain previously reported that the property, on one of Newcastle’s busiest street corners, was built by the Australian Agricultural Company as one of the city’s first display homes. 

Four registered bidders battled out it with the gavel falling at $750,000.

The successful buyer plans to use the property as a medical practice. 

Listing agent John Kerr of Dalton Partners described it as a “fantastic” result for the vendor NSW Trustee and Guardian.