Reserve Bank of Australia governor Philip Lowe has advised borrowers to prepare for a possible interest rate rise this year, as data shows homebuyer demand continues to ease.

With supply chain disruptions and the Russian invasion of Ukraine pushing up prices and inflation, Mr Lowe said an earlier rate rise is now possible.

"It is plausible that interest rates will increase this year – it's not guaranteed but it is plausible," Mr Lowe told an Australian Banking Association conference on Friday.

"The message here is it would be prudent to plan for an increase," he later added.

Borrowers have been advised to prepare for an interest rate rise, which could happen this year. Picture: Getty

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Many leading economists have brought forward their predictions for the timing of the RBA's first rate hike, with Commonwealth Bank of Australia and AMP Capital now expecting a move in June.

Asked about the chance of a June rate increase, Mr Lowe said he did not want to specify a month.

"Presumably there's a certain configuration of events that could lead to an earlier increase but it's also plausible that this gets pushed out again further," he said.

"There are plausible scenarios still where rate rises don't occur for a long time, well into next year or even further."

The last time the RBA raised the cash rate was in November 2010, with Mr Lowe noting many borrowers had no experience with higher rates.

"For many borrowers that's going to come as quite an unwelcome development," he said, adding depositors would welcome higher rates on their savings.

The RBA is paying close attention to the extent to which developments in Ukraine add to supply-side price shocks and inflation pressures as well as to labour costs in Australia, with Mr Lowe saying it will take quite some time before wages growth picks up substantially.

The RBA board has said it will not increase the cash rate from a record low 0.1% until inflation is sustainably within its 2% to 3% target band. Mr Lowe said the recent lift in inflation and global developments had "moved us closer to that point".

The RBA is being patient before pulling the trigger on an interest rate rise. Picture: Getty

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PropTrack senior economist Eleanor Creagh said while there is a scenario in which a rate hike this year is appropriate if the economy continues to perform better than expected, the RBA has made it clear it is prepared to be patient.

"The more the economy continues to track better than expected, the more likely a third quarter rate hike becomes," Ms Creagh said.

"But at this stage it still seems like the most likely scenario would be that wages will not be where the RBA wants them to be until later in the year.

"If that accelerated trajectory continues then it does become more plausible that we could reach that point earlier in the year."

Homebuyer demand remains strong, although it has eased from the record-high levels reached in 2021, according to the latest PropTrack Housing Market Indicators Report.

Ms Creagh said although demand is moderating, overall activity levels remain elevated and demand still remains above average levels.

"Although those measures of prospective buyer demand are moderating somewhat, homebuyers that are out there transacting in the market still remain motivated and preliminary sales volumes are tracking last year's historic pace so far," she said.

Buyers have more choice following a busy start to the year for new listings of properties for sale, after record levels of new supply at the end of 2021.

"Homebuyers are taking advantage of the increased choice that's available to them," Ms Creagh said.

"With more stock continuing to be added to the market, this should be welcomed in bringing what could be a more sustainable balance between buyers and sellers in the year ahead."

An increase in new listings has given homebuyers more choice. Picture: Getty

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Friday's report showed views per listing eased by 0.6% during February after being at a record high in January and over much of last year. But nationwide views per listing were still 40.3% higher than at the same time last year.

"We expect that views per listing are likely to continue moderating off the historic high levels with a heightened volume of new stock coming to the market," Ms Creagh said.

Properties are still selling quickly, with the median number of days a property was listed on realestate.com.au in February 2022 being 35 days, down from 52 days in January.

Ms Creagh said the strength in new listings and auction volumes of late 2021 have carried on into early this year.

"Some of this is likely due to the disruption to sellers’ plans during last year’s lockdowns, while other sellers are motivated to list now to take advantage of recent price growth and elevated demand before interest rates rise."

Friday's report showed search volumes nationally on realestate.com.au rose 7% in February.

Ms Creagh noted there was a large drop off in search activity in the first week of March compared to the final week of February.

She said the decline was particularly evident in Queensland (down 19%) and NSW (down 11%), which was likely due to the ongoing flooding disasters.