Queenland's housing market will remain stable despite the recent announcement by the Reserve Bank of Australia of an interest rate rise of 25 basis points to 5.75 per cent, according to The Real Estate Institute of Queensland (REIQ).

REIQ Chairman Peter McGrath said the Queensland property market was in a position of strength as it continues to defy the downward trend being seen in Australia's other major capitals.

"The rise was not unexpected and while the increase may slightly dampen sentiment in the property market over the next couple of months, the Institute believes the rise will not overly deter Queensland property consumers," said Mr McGrath. "Queensland still reflects very good economic fundamentals."

Nevertheless, the Institute is still concerned at the overall effect that this rate rise will have on the Australian economy, especially given the growing impact of high petrol prices.

"We strongly urge Australia's lending institutions to consider not passing on the rate rise to consumers, particularly first-time homebuyers," said Mr McGrath.  "Over the past year first homebuyers have been encouraged by positive data slowing inching away at low housing affordability. This rate rise effectively sets them back months and may permanently influence some young people from ever entering the housing market."

Nevertheless, the Institute said that Queensland represents a comparatively affordable investment option for many Sydney and Melbourne buyers who are also looking for a change in lifestyle.

"While the rise in interest rates is expected to impact on affordability, Queensland remains in a strong position when compared to other states," said Mr McGrath.