Interest Rates Rises
Interest rates are biting property investors hard – you could say the credit crunch is biting them back after 10 years of historically low interest rates. You could also say these are difficult times all right.
But it’s not all bad if you can manage your personal cash flow. High interest rates are almost always a direct result of a very buoyant economy and this is good for real estate investors.
Certainly investors have taken flight from the stock market as a result of some nasty cracks in the system and this has affected confidence in business, share and property markets.
The other problem is that interest rates are rising and home affordability is falling. Property developers too will find it a lot tougher to get finance from a panicky banking sector. But this is not the whole story: the real driving forces behind rising property prices are immigration, which is running at a record level and might even be boosted by the slowdown in Europe, and employment.
And on the supply side there’s an acute shortage of houses and, in particular, units in Sydney and Melbourne.
This all points to a positive – albeit, long term – view that property prices in select markets will trend upwards. The only remaining question is how high interest rates will go and for how long? Talk of rate rises seems to have a more debilitating effect on the property market than when it happens, a reverse of the old share market adage to buy on rumour and sell on fact.
Filed Under: Interest Rates • Property Investment
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