Perth property prices are unlikely to improve in the next two years as yet another interest rate rise adds to already tough conditions, analysts have said.

In the aftermath of yesterday's Reserve Bank decision to increase the official cash rate 0.25 of a percentage point, to 4.75 per cent, property industry figures have reacted with dismay.

Real Estate Institute of WA president Alan Bourke slammed the "shock" decision.

Advertisement: Story continues below "In trying to quell the mining industry they've hurt everyone else," Mr Bourke said.

"Certainly the last thing sellers or buyers, or retailers for that matter, needed was an interest rate rise. It's a very fragile market out there at the moment."

The Perth housing market was already oversupplied by 30 per cent, with prices sluggish.
"Nobody wins in this situation," Mr Bourke said.

"Not the home-seller sitting in the market waiting to sell a property, maybe already having reduced the price and having a long lead time; not the buyer, who's saying it's going to cost them more; and not anyone with a mortgage who's going to pay more each month."

It was likely to be between one and two years before there was "any form of price growth" in the Perth market, Mr Bourke said.

Apart from interest rate rises, factors such as sluggish population growth were also dampening demand.

"It's a bit of a perfect storm unfortunately," he said.

Those looking to sell "should not build any margin into negotiations", while buyers who were cashed-up or needed small mortgages were in the driver's seat.

Head of the Real Estate Institute of Australia, WA agent David Airey, said the "RBA has played Scrooge to homeowners in the lead up to Christmas".

"As well as seeing a softening of the housing market, we are experiencing a very concerning and continuing decline in housing affordability," he said.

"This rate increase will cause undue mortgage stress for home owners at a time of the year that is characterised by hardship for struggling families."

While the Commonwealth Bank reacted to the RBA decision by hiking its own interest rates by almost double the increase in the cash rate, a spokesman for subsidiary Bankwest - WA's largest home lender - said it was still reviewing its rates.

However, Bankwest has traditionally followed the lead of its owner since being bought by the CBA in 2008.

Urban Development Institute of WA chief executive Debra Goostrey said the latest RBA rate rise was a threat to the property industry in the state and she called for a hold on further increases until at least early next year "to foster consumer confidence".

TREASURER Wayne Swan has warned the big banks the Federal Government will implement reforms to keep them honest.

Commonwealth Bank was the first of the big four to pass on the RBA rate rise, with National Australia Bank and Westpac also matching the central bank's rate rise on Tuesday. ANZ said its standard variable rate (SVR) on home loans will increase by 25 basis points to 7.41 per cent, the second highest of the big four banks.