The Reserve Bank of Australia (RBA) has recently announced an increase of 0.25% in interest rates to 3.35%, taking effect in February 2023. This news may come as a surprise to many, but for property investors, it could be the right time to start investing.
Does the interest rate lift affect property investment?
The decision impacts the property market due to the effect of supply and demand. Property investment remains the safest asset, returning higher revenues than bank savings or shares.
As a property investor, it’s essential to understand the connection between interest rates and investment opportunities in the property market.
When the interest rates go up, borrowing becomes more expensive. This usually leads to a slowdown in the property market as fewer people can afford to purchase homes. However, for those who have the financial means to invest, this can be an excellent opportunity. As the demand for homes decreases, property prices also decrease, creating opportunities for savvy investors to purchase properties at lower prices.
As interest rates increase, rental prices increase. This makes rental properties a more attractive investment option as they become a more reliable source of income. With rental demand increasing in 2023, this presents a solid opportunity for property investors to diversify their portfolios.
Why Invest in Property? The Safe Bet for Bigger Returns
Investing in property offers benefits that savings accounts can’t match. Unlike savings accounts, property investments generate income through capital growth, rental income, and tax deductions. While shares can experience sudden and unexpected value fluctuations, the property market is more stable and tends to grow over time.
As an illustration, the report “Hot 100 suburbs to watch in 2023” by RealEstate.com.au and PropTrack highlights that suburbs such as Berwick experienced a median price growth of 11% and a 7% increase in rental prices in just one year. Also, according to Property Value by CoreLogic the median price in Bairnsdale had grown 29.8% in 1 year.
The value of a property is influenced by various factors such as location, property features, demographic trends, the development of the surrounding area, rental prices, and renovation potential – not just interest rates.
Is this a good moment to invest in property?
The answer is simple: Despite the rise in interest rates, now is still a great time to invest. Here’s why:
Ready to take the first step in property investment?
At Property Ducks, we specialize in helping property investors navigate the market and identify the best investment opportunities. Our boutique property investment advisory services provide expert advice and support to help you make informed decisions and maximize your returns.
So, if you’re looking to take advantage of the current market conditions and invest in properties, reach out to us today. We’ll help you make the most of your investment and secure your financial future.