For anyone with at least one eye on the Australian property market, this is a burning question.
In fact, it’s one that we get asked all the time – in discovery calls with prospective clients, in catch up meetings with existing clients, and even when we’re just catching up with friends.
Should property investors wait until interest rates drop?
It’s a very reasonable question to ask at this point in time too, especially due to the fact that the media are constantly putting property affordability in the spotlight, feeding bits and pieces of information that will make you confident in the market one day, and then scared to spend $5 the next.
With the interest rate rises Australia experienced throughout 2022 and 2023, coupled with cost of living increases and general economic inflation, it’s quite safe to say, borrowing money has become more difficult and daunting for lots of Australians.
But, to put it simply, the answer to that burning question is…
NO – waiting for interest rates to drop is a slippery slope, and not one we recommend to anyone looking to create a successful long term property investment portfolio.
Why? Good question – there are a couple of major reasons why savvy investors are getting into the market now – and have been for a while. Stick around, because we’ll run you through the full picture:
1. Follow the Leader
In a way, humans are sheep. We all tend to find comfort in sticking together and sharing similar thoughts and beliefs.
In some circumstances this can be great, but in others – such as investing, it’s not so beneficial.
In the case of what we’ve seen over the past couple of years, with a bit of lost confidence from the Aussie population as a whole, and a rise in interest rates, it’s plain and simple – people are flat out missing out on great opportunities to enter the property market.
2. There’s a dire lack of supply
When it comes to looking at the future of the property market as a whole, there’s nothing more important than supply and demand.
According to the National Housing Finance and Investment Corporation, there will be a shortage of around 106,000 homes across Australia by 2027. This comes as a result of increased construction costs, alongside population growth as a result of migration.
Alongside this, despite numbers rising over the past couple of months, according to the Australian Bureau of Statistics, we saw an 11 year low in new home approvals in 2023.
So, when it comes to finding quality property in Australia, those who can provide supply to help counter the shortfall will be in a great position.
You know – YOU, the investor, supplying new homes, one property at a time!
3. Demand skyrocketing
With increased confidence coming from a plateau and ultimate lowering of interest rates, slowing in inflation rates, and a general continued return to the status quo, on the whole, CONFIDENCE is well and truly trending up.
With this growth in confidence, we can go back to our first point – that as people, we love to be sheep. When everyone grows more confident in spending money and purchasing in a growing property market, one key thing happens…
What is it?
Well, for that, let’s look at our second idea.
DEMAND for property goes up.
And if you’ve been hanging around with us for a while now, you’ll be well acquainted with the idea that growth in demand is a key contributor to making prices climb.
So, with more demand, it’s very likely that we’ll also see a steady increase in property prices around Australia – especially with a market that is so undersupplied, making it all the more important to get smart, get savvy and get into the market sooner rather than later.
For all the details on Australia’s property market supply and demand – check out the blog HERE!
As our clients know, our methodical research and acquisition strategies place precedence on ensuring your investment strategy meets your INDIVIDUAL goals – not a formula that may have worked for someone else.
Want to learn more about our Propell Property Plans?
Reach out HERE, or give us a call on 1300 776 735 – we’d love to hear from you!
