How does the cash rate improve property investing prospects?
As the Reserve Bank of Australia reveals its cash rate for October (2 per cent again, in case you were wondering), commentators all have their bit to say about what it means. While the overall message is stability for house hunters, there have been statements that suggest the market is now actually tilting in favour of buyers.
Why September could put a spring in investors' steps http://t.co/HwZzEWI8gK
— Christine Childs (@ThinkMoneyWTP) August 26, 2015
When you consider that the Commonwealth Bank Home Buyers' Index recently showed many major cities were actually sellers' markets, is this actually true? Should you be looking a little harder at your Queensland investment property prospects?
Even the sellers' markets are shifting
In the last few years, Queensland property has been slow and steady with its growth (especially in southeast areas) while Sydney rocketed ahead as an extreme sellers' market. However, Real Estate Institute of New South Wales President Malcolm Gunning responded to the cash rate decision by saying that the wider market is now moving in favour of buyers.
"After a period of solid growth as a result of record low interest rates the tide has now turned in favour of those seeking to purchase property to live in," he stated in an October 6 release.
Factoring in the fact that Brisbane and surrounding areas have already been places that tilt towards buyers, this could tip the scales even further in your favour. Ongoing low rates mean you could start accruing capital gains through property with lower interest payments for longer.
But when will rates go up again?
It's a question on the lips of a lot of property investors: When are interest rates going to go up? If they stay tethered to the cash rate, then there might not be a significant jump in rates for a while yet.
Writing ahead of the RBA decision, Westpac's Chief Economist Bill Evans said that the bank's view is stability at 2 per cent over most of 2016. That's because growth in the economy looks like it will stay in line with existing predictions, and there will be no need to cut or boost the cash rate to stimulate or slow down growth.
For people in search of investment property, this means home loans and interest rates are likely one less thing to worry about. This leaves you more time to focus on other aspects of wealth creation, like finding the right piece of real estate and setting up an investment strategy that benefits you in the long-term.