Looking Beyond the Negative Effects of Rate Hikes on Property Investment

Rising interest rates and high inflation are having a clear impact on the property market and how investors are navigating this changing landscape. But when it comes to property, it's important to look beyond short-term market impacts to take advantage of long-term opportunities.

  • February 9th, 2023
To combat continuing high inflation, the Reserve Bank of Australia (RBA) has yet again increased the cash rate by 25 basis points. Coming in as the 9th consecutive increase since May 2022, this brings the cash rate to 3.35% (a 3.25% increase in just 10 months). With the Consumer Price Index (CPI) inflation at a 33-year record high of 7.8% combined with below average expected growth for both 2023 and 2024, the economic outlook seems daunting. And despite lower energy costs, a tightening monetary policy and resolving supply chain issues, inflation isn’t expected to come down to target rates for quite some time. But what does this mean for property investors?While the cost of borrowing rises, it becomes more difficult for many new investors to obtain finance. And with the mortgage payments of existing investors becoming more expensive, many feel discouraged from looking for their next property. As a result of this decrease in demand, the property market in many areas is showing signs of slowing down. But while rising interest rates can have a negative effect on the price of property, it’s important to remember that property prices are dependent on a variety of variables, not just interest rates. Despite potentially lower valuations for property owners, rising rates can often spell out opportunity for savvy investors. And with the RBA forecasting inflation to come down to their targeted 3% by mid 2025, long-term investors should be wary of getting caught up in short-term price fluctuations and fearmongering. How much further interest rates need to rise for the RBA to be satisfied remains to be seen. Although future rate hikes are to be expected to counter inflation, we encourage investors to take a long-term approach to their investing, manage their emotions and look for the opportunities that will present themselves in the coming months and years. If you’d like to talk to one of our property mentors to see how you can best set yourself up and take advantage of the $10 trillion dollar property market, book a free one-on-one session!


  • February 19th, 2024

Is Your Mortgage Holding Back Your Investment Dreams?

Homeownership has long been a pillar of the Great Australian Dream, a symbol of security, and an investment in one's future. Yet, in the grand narrative of personal finance and real estate, we often overlook a crucial question: Is your mortgage holding back your investment aspirations?

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  • September 5th, 2023

Rate Steady at 4.1%: Benefits for Property Market Investors

The Reserve Bank of Australia's decision to leave the cash rate at 4.1% is a welcome relief for buyers and investors in the property market, and The Property Mentors can provide guidance and support needed to take advantage of this opportunity and make wise financial decisions about your investments.

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